Facebook Inc. today said it’s relaxing restrictions on advertisements for cryptocurrencies and blockchain technologies on its platform.
The ban first arose in January 2018 when the social network giant rolled out a blanket restriction on all ads featuring cryptocurrencies or initial coin offerings, a method of crowdfunding new projects and startups by selling blockchain-based tokens.
The reason for the ban at the time was that ICOs had become a major funding path for blockchain startups but too many weren’t aboveboard. Total capitalization from ICOs in 2017 is estimated to have exceeded $10 billion in 2017 and $11 billion in 2018, according to CoinTelegraph. But a report looking at the success rate of ICOs in 2017 from advisory firm Statis Group revealed that more than 80 percent were scams.
With such a high likelihood that any given ICO could be predatory or fraudulent, Facebook stopped taking any ads mentioning cryptocurrencies, blockchain or ICOs, including well-known cryptocurrencies such as bitcoin, Litecoin and Ethereum.
The ban on cryptocurrency advertisements followed a trend that included a full ban by Google LLC and a partial ban by Twitter Inc.
In June, Facebook began to allow some blockchain-related advertisements, but not many. Under the new policy, cryptocurrency ads would require pre-approval from the company’s Facebook Product Management team and would have to follow Prohibited Financial Products and Services guidelines.
“Last June, we updated our advertising policies to require prior written approval to advertise cryptocurrency products and services on Facebook,” the company wrote in a blog post. “Since then, we’ve listened to feedback and assessed the policy’s effectiveness. While we will still require people to apply to run ads promoting cryptocurrency, starting today, we will narrow this policy to no longer require pre-approval for ads related to blockchain technology, industry news, education or events related to cryptocurrency.”
Under the new rules, ICOs are still banned, but projects that issue and use cryptocurrencies or tokens, such as blockchain startups, as long as those tokens are not being advertised for sale as crowdfunding, are OK. That opens up a lot of ground for startups to advertise themselves as they put blockchain technology to use for industrial, enterprise, financial and educational use.
Since some products and services come extremely close to the same sort of activity seen in ICOs, Facebook said, the policy will still restrict certain financial services to pre-approval.
“We’re committed to preventing misleading advertising on our platforms, especially in the area of financial products and services,” Facebook wrote. “Because of this, people who want to promote cryptocurrency and closely related products like cryptocurrency exchanges and mining software and hardware, will still have to go through a review process.”
This relaxation on blockchain-related advertising restrictions comes shortly after a report revealed Facebook intended to raise $1 billion to develop its own blockchain-based cryptocurrency payment system. The project would produce a token that could be used for monetary exchange and a competitor for payment networks such as Mastercard and Paypal.
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