Ali Raza
The governor of the central bank of Ireland, Gabriel Makhlouf, wants lawmakers to pass legislation that will ban the advertising of cryptocurrency products. Makhlouf, a critic of crypto assets, has also said that cryptocurrencies not backed by any underlying asset are a Ponzi scheme.
Ireland’s central bank governor wants crypto advertisements banned
The governor wants crypto firms to halt advertisements targeting young investors. He noted that while crypto assets presented a minimal risk to financial stability, there was a significant threat to retail investors.
Makhlouf has said that many young investors have already ventured into the cryptocurrency space. The majority of advertisements related to crypto assets were directed to this demographic. Therefore, he proposed that crypto adverts targeting this group be banned.
The governor has also criticized the crypto assets that are not backed by any fundamentals. He noted that the majority of crypto assets in the market lacked intrinsic value, and the investors that put their money in these assets were gambling, and in most cases, they ended up losing money.
Makhlouf has also advocated for regulations within the European Union. He noted that the crypto-related regulations being formulated in the EU would also focus on stablecoins, but there was a need to come up with more regulations in the future.
The Irish central bank has previously held a negative stance on the cryptocurrency sector. In March last year, the central bank warned investors about misleading advertisements in the cryptocurrency industry and the use of social media influencers to promote crypto products and firms.
Crackdown on crypto advertisements
Ireland is not the only country expressing concerns over the kind of advertisements made by crypto firms. These firms have invested in sponsorship deals and celebrity endorsements to promote their services. The bankruptcy of the FTX exchange in November last year saw several influencers promoting the exchange being sued by investors.
The FTX exchange had engaged several influencers, such as Kevin O’Leary, Tom Brady, and Steph Curry, to advertise its services. The class action lawsuit facing these influencers claims that the defendants misrepresented the exchange and failed to share complete information to make consumers invest in the exchange.
Last year, the US Securities and Exchange Commission (SEC) reached a $1.26 million settlement with Kim Kardashian. The SEC had filed charges against Kim Kardashian for promoting the EthereumMax token on her Instagram account.
The Advertising Standards Authority of the United Kingdom also cracked down on crypto advertisements in 2022. The regulator came up with strict rules for the crypto industry, including a requirement for crypto firms to clarify that the past rallies in the crypto market did not guarantee that the same would happen in the future.
At the time of issuing these guidelines, ASA mentioned several crypto exchanges that had violated ad regulations, including Coinbase, eToro, and Kraken. The regulator also took down advertisements made by the Luno exchange on London buses and the London Underground network.
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This article was written for Business 2 Community by Ali Raza.
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