By George Ward
According to Gabriel Makhlouf, cryptocurrencies not adequately backed up by genuine assets are nothing more than Ponzi scams. Makhlouf, the governor of Ireland’s central bank, has suggested to the Irish government that ads for cryptocurrencies that are aimed at young investors be prohibited.
However, these unbacked cryptocurrencies do not pose much risk to the larger financial systems. Even though their risk is limited, customers still need to be protected from the dangers they pose.
While appearing before a parliamentary committee, the governor stated that unbacked cryptocurrencies do not have any social value. However, Makhlouf, who likened investing in cryptocurrency to gambling, stated that individuals should be permitted to gamble.
But he cautioned that most of the time, gamblers lose their money.
In addition, the apex bank governor claimed that many young adults had placed their funds in cryptocurrency. Also, he has observed that there is an abnormally high volume of advertising about cryptocurrency that is directed toward these young investors.
Hence, he proposed the prohibition of crypto commercials targeted at young investors.
Support For Makhlouf’s Suggestion
Many players in the crypto space also share similar views as Makhlouf. Last year, the Monetary Authority of Singapore (MAS) restricted crypto marketing to firms’ websites and social media accounts, essentially banning all crypto advertisements in public spaces and online.
The MAS also forbade the use of other platforms, such as social media influencers. Around the same period, the Financial Conduct Authority (FCA) of the United Kingdom (UK) announced plans to crack down on cryptocurrency advertisements.
As part of this initiative, misleading cryptocurrency advertisements were prohibited. Also, the FCA subjected these advertisements to the same regulations that apply to marketing other financial products, such as insurance products and securities.
At the time, UK’s Advertising Standards Authority (ASA) called crypto ads a “red alert priority” and cracked down hard on them. It banned adverts from companies like Papa John’s Pizza Chain and Coinbase that didn’t actively and explicitly warn customers about the risks of investing in cryptocurrency.
The Securities regulator also prohibited advertisements claiming that crypto investments are low-risk or beneficial for everybody. In addition, it banned advertisements that encourage an extreme feeling of urgency or the fear of missing out.