By David Drake
With the tremendous growth of the cryptocurrency industry in recent years, some undesired outcomes have been registered. These include instances of fraud that have become rife as unscrupulous industry players take advantage of investors’ hard-earned cash.
A report by the Federal Trade Commission shows that in the first two months of this year, investors lost up to $532 million in crypto-related fraud. The report further projected that investors would lose $3 billion by the end of 2018.
As part of consumer protection efforts, several tech companies, including Google and Facebook banned cryptocurrency adverts early this year. This announcement ignited an uproar from stakeholders because it reduced promotion options for genuine players. But, six months into the ban, tech companies have made a dramatic turn. Facebook and Google have already announced a reverse on sections of their blanket ban.
In the new advertising policy, which takes effect this month, Google revealed that it will only allow regulated crypto exchanges in the US and Japan to run adverts on its platform. The reversal of Google’s blanket ban follows that of Facebook, which now allows pre-approved advertisers to promote cryptocurrency and related content on its platform.
While some cryptocurrency companies may feel aggrieved by the fact that the new policy does not allow for direct advertising on Google, players in the industry welcome Google’s step in making the cryptocurrency industry more secure for investors moving forward.
Besides the measures being taken by tech companies to enhance consumer protection, clarity in legislation is critical to advancing cryptocurrency integration in mainstream economy. This need has led stakeholders in the digital currency space to pressure the US Congress into speeding up the cryptocurrency legislative process.
Many in the industry feel that the status quo has been maintained in the regulation of cryptocurrency industry. This is so because in the US, the financial market regulator, the Securities and Exchange Commission (SEC) is still applying the same laws it uses to govern stocks to regulate digital assets.
According to John Hoelzer, founder and CEO of ONe Network, application of such laws in the cryptocurrency market has left a grey area in legislation and does not encourage companies to operate in the country.
He says, “Having a clear picture in the US will allow more companies to know how to operate within the US framework of regulation. As it stands, there is a lot of ambiguity which adversely affects the US and the growth of Crypto here. Many companies will not operate here due to the possibility of the US over-regulating or banning it outright in the future.”
Hoelzer further adds that the US government needs to embrace the cryptocurrency industry and regulate it well.
He says, “The US should embrace this market and regulate it properly without being over burdensome. Allowing a market to thrive as it did during the 90s and early 2000s in the tech sector brought about huge advances in technology and let then emerging market to flourish and become what it is today. The US cannot afford to lose on this technological renaissance.”
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.