Facebook Turns off the Cryptocurrency Advertisements Ban Switch
A much-anticipated update to Facebook’s ad policy recently came into effect, changing the social media giant’s guidelines on the management of crypto-related advertisements on its platform. In a blog post, the company, now called Meta, said it had decided to increase the number of regulatory licenses it was acceptable for companies to advertise on its platform, from a paltry 3 to 27. This means that it will now be much easier for blockchains, cryptocurrencies, and assorted decentralized finance (DeFi) projects to run Facebook ads.
The decision by Facebook to change its stance on cryptocurrency marketing was reached after the company acknowledged the growth and development of the crypto space. Facebook praised governments around the world for their efforts to regulate and streamline the crypto industry. These efforts, Facebook believed, had led to the maturity and stability of cryptocurrencies in the last few years.
This stability and maturity being witnessed in the crypto space that Facebook believes will help it make more transparent and equitable policies regarding cryptocurrency marketing on its platform.
Policy Made to Protect Social Media Users From Scammers
In 2018, Facebook decided to prohibit ads promoting financial products associated with deceptive or misleading practices. These restrictions mostly affected crypto start-ups, initial coin offerings (ICO), and binary options, all of which Facebook felt at the time were being used by bad-faith actors to swindle the public.
A study carried out by a New York-based ICO advisory company, Satis Group LLC, indicated that up to 80% of all initial coin offerings in 2018 were scams. According to the study, only a paltry 8% of ICOs floated that year reached the trading stage on various virtual currency exchanges. Of that 8%, 4.4% were reported as dwindling projects, while only 3.6% were considered promising or unequivocally successful.
The unregulated and virtually anonymous nature of crypto makes it a constant target for scams ranging from fraud to hacking, digital theft, and phishing. In the first two months of 2018 alone, it was reported that investors lost over $1.3 billion worth of crypto to scammers and fraudsters.
In June 2018, Facebook made slight changes to its ad policy that allowed advertisements from businesses that had received prior written approval. Then in 2019, the company scaled back the policy even further and allowed more companies working on crypto and blockchain technology to promote their projects on the platform. Industry observers believe that taking a phased approach to allowing crypto marketing on its forum will give Facebook more time to examine the crypto industry and to better understand its nuances.
Responding to questions about the lifting of the ban, a Facebook spokeswoman said, “While we loosened the policy this summer, it remains restrictive.” She further added, “We will continue to listen to feedback, look at how well this policy works, and continue to study this technology so that, if necessary, we can revise it over time.”
Facebook Developing its Own Cryptocurrency
The social media platform’s move to allow more crypto ads on its network came around the same time it was ramping up efforts to build its own cryptocurrency. The token, then known as Libra, was intended to be a universal currency anchored to multiple sovereign fiat currencies such as the dollar and the euro.
However, Facebook’s cryptocurrency project came under strong criticism from fiscal regulators around the world, who feared the currency could threaten global monetary stability and enable money laundering. This backlash led some of the project’s strongest backers, like MasterCard, Visa, and Stripe, to walk away.
Despite all that, Facebook did not pull the plug on its crypto dream but instead decided to rebrand it and develop it in a more low-key manner. The project, now called Diem, is set to be rolled out later this year in a small-scale pilot focusing on microtransactions between individual consumers.
Speaking of the positive effects of lifting the crypto ads restrictions, former Facebook employee and current CEO of Retina AI, Emad Hasan, said, “These companies had been in a spot where they couldn’t advertise on Facebook. They couldn’t drive people to convert fiat currency into cryptocurrency. This will enable the average day-to-day person to do this.”
Initial coin offerings are still not allowed to advertise on the social media platform, but it is hoped that further development in the crypto space aimed at making crowdfunding more secure from scams and rug pulls, may sway Facebook’s attitude towards them. In addition to that, Facebook’s experience with its own digital currency may also help shape its policy regarding crypto restrictions on its platform.
Google Lifts Ban on Crypto Ads
In August last year, Google Ads also changed its financial products and services policy that previously curtailed crypto ads on its platform. To reduce misleading advertisements and eliminate blatant crypto scams, the search engine giant laid out a raft of requirements that advertisers had to meet to run ads on Google.
These requirements include registering with either the U.S. Financial Crimes Enforcement Network (FinCEN) or a federal or state-chartered banking entity and complying with the legal requirements of the jurisdiction in which a company is domiciled, as well as Google’s advertising policies.
While businesses like crypto exchanges and crypto wallets can now advertise on Google, the tech giant’s new policy still imposes an overarching ban on most crypto-related products and services, including initial coin offerings and decentralized finance protocols. Additionally, the partial lifting of Google’s ban on crypto ads only applies to companies based in the United States. The rest of the world still has a while to wait.
Facebook’s decision to lift crypto restrictions on its platform will be hugely beneficial to blockchain start-ups that could not previously access the social media’s large and receptive constituency. Crypto startups may have moved to more crypto-friendly social platforms to promote their projects, but Facebook’s reported 3 billion active users every month is a potentially game-changing number for prospective crypto projects.
When Facebook changed its name to Meta, it signified a move towards the creation of an immersive new social space that could have deep compatibility with blockchain technology. As such, the company cannot afford to prolong its adversarial relationship with crypto developers like Bloom, whose products could potentially play significant roles in Facebook’s upcoming metaverse.