Earlier in the year online advertising giant Google indicated that it would be banning ads relating to cryptocurrencies and Initial Coin Offerings beginning June. Other internet giants such as Twitter also followed suit after the announcement by Google. Facebook had also taken a similar decision nearly a month before the online search engine.
The advertising bans came following concerns that there was a proliferation of scams meant to defraud investors. Additionally there were concerns that sufficient frameworks were lacking which could be employed with a view to guaranteeing consumer protection.
Last month a study conducted by The Wall Street Journal indicated that over 20% of all Initial Coin Offerings have the hallmarks of a scam. In the study 1,450 Initial Coin Offerings were reviewed. According to the study Initial Coin Offerings numbering 124 either concealed or faked team members while 111 of them had issued white papers which were plagiarized.
While the U.S. Securities and Exchange Commission explicitly forbids guaranteeing a definite return on investment 25 ICOs went on to do exactly that. Another 48 Initial Coin Offerings also didn?t have a website which was functioning. The study went on to report that while some of the ICOs had shut down there were those which were still raising money from investors.
However the move by the internet firms will have an adverse effect on the virtual currency sector. This is because the Initial Coin Offerings will be restricted in the ways they can reach new investments since they can no longer advertise on Google and Facebook, two tech companies which are largely considered to be a duopoly with regards to online advertising. Another effect of the ban would be weeding out the scams in the ICO market and thus bringing credibility to the sector. This could also offer stability as scammers will be less attracted to the space.
For Initial Coin Offerings all is not lost though as alternative ways of reaching potential investors still exist. ICOs for instance could increase community engagement especially on forums, message boards and social platforms. Tools such as press releases could also prove to be useful.
Disclaimer: Nothing in this article should be construed as financial advice in any way, nor as an encouragement to engage in cryptocurrency trading activity. This article was not sponsored by any entities or companies mentioned in the article. The only purpose of this article is to inform/educate on the topics discussed in the article.
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