Business Maverick


Enter Code of Advertising Practice — crypto’s days of Wild West-style promotions in SA are over

Enter Code of Advertising Practice — crypto’s days of Wild West-style promotions in SA are over
(Photo: EPA-EFE / Rodrigo Sura)

The Advertising Regulatory Board has added a cryptocurrency extension to its Code of Advertising Practice, which prohibits making wild claims about crypto.

Cryptocurrency might be digital, but it remains a highly risky asset class and buyers must never be hoodwinked into thinking it is a good investment, which is why the Advertising Regulatory Board (ARB) has moved to introduce new guidelines governing cryptocurrency products to its Code of Advertising Practice.

The ARB’s new rules, drafted after consultation with the crypto sector, are aimed at protecting consumers from being deceived by false advertising.

The announcement comes two months after the spectacular collapse of FTX, which faced a “liquidity crisis” in November 2022. It has now filed for bankruptcy. Its founder, Sam Bankman-Fried (“SBF”), is out on bail of $250-million and his co-conspirators are singing like canaries.

Reuters reports that the hedge fund’s former chief executive told a judge during her guilty plea for her role in the exchange’s collapse that SBF and other FTX executives received billions of dollars in secret loans from the crypto mogul’s trading firm, Alameda Research.

Ellison and FTX co-founder Gary Wang have both pleaded guilty.


In a statement issued on Tuesday, ARB CEO Gail Schimmel called the new clause a “wonderful example” of an industry cognisant of harm that “could be done in its name”, which is voluntarily opting for self-regulation without being forced to do so by the government.

“This has been an exciting project and we know that it will result in better protection for vulnerable consumers.”

Crypto exchange Luno’s general manager for Africa, Marius Reitz, who has apparently driven the project, said: “We don’t want rogue advertisers making claims that mislead vulnerable consumers about the reality of crypto investment. It is important to us that consumers enter this exciting market with their eyes open and their expectations realistic.”

The new guidelines require advertisements to “expressly and clearly state that investing in crypto assets may result in the loss of capital as the value is variable and can go up as well as down”, with wording that advises investing in crypto may result in a loss of capital.

The advert’s overall message cannot contradict the warning; it must explain the relevant product or service in an easily understandable way; must give a “balanced message about the returns, features, benefits and risks associated with the product or service”; be able to substantiate claimed rates of return, projections and forecasts, communicate significant conditions applicable; and be clear that “information presented about past performance must make it clear that the past performance is not indicative of future performance. Any historical period or past performance should not be presented in such a way that it creates a favourable impression of the advertised product or service”.

Influencer code

Influencers have been given special mention in the new rules, which say that where influencers or ambassadors are used to promote a crypto asset product or service, the ARB’s influencer code must be complied with. 

“In particular, the influencer or ambassador may share factual information only. Influencers and ambassadors may not offer advice on trading or investing in crypto assets and may not promise benefits or returns.”

In the FTX scandal, influencers played a key role in punting the fraudulent scheme: Investors have now sued SBF and a host of celebrities, including model Gisele Bündchen (the “face” of FTX, who served as an “adviser” to connect the exchange with charities) and her ex-husband, the American football star Tom Brady, comedian Larry David and basketball star Stephen Curry.

Visit Daily Maverick’s home page for more news, analysis and investigations

The ARB code now also requires that adverts by crypto asset service providers who are not registered credit providers should not encourage the purchase of crypto assets on credit. 

On 19 October 2022, crypto assets were declared financial products and subject to Financial Sector Conduct Authority regulation.

At a briefing the following day, Eugene du Toit, head of the FSCA’s regulatory frameworks department, told a media briefing that the declaration that crypto assets are financial products does not mean they are legal tender.

“We are not legitimising crypto assets. We are not giving credence to crypto assets,” he said. BM/DM


Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted


This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.

Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

Become a Maverick Insider

This could have been a paywall

On another site this would have been a paywall. Maverick Insider keeps our content free for all.

Become an Insider
Daily Maverick Elections Toolbox

Download the Daily Maverick Elections Toolbox.

+ Your election day questions answered
+ What's different this election
+ Test yourself! Take the quiz