First Facebook, now Google, it seems like the whole world is turning on Cryptocurrency, Google’s cryptocurrency ad ban might seem like bad news but it’s not the end of the world.
Another day, another piece of bad news rocks the cryptocurrency world. Google has announced an update to their Financial services policy that will mean that “Cryptocurrencies and related content” will no longer be able to advertise on Google’s platform.
Understandably this has worried many cryptocurrency enthusiasts and there are fears of wider crackdowns against the cryptocurrency community. While things appear bad they are not as terrible as they seem.
An Explosion Of Suspect ICOs Has Led To Wider Crackdowns
Regulations and crackdowns against cryptocurrency have been the norm for some time now. Ever since China first moved to declare ICOs an illegal fundraising method concerns surrounding draconian cryptocurrency legislation has been rising. Other nations like Switzerland have also taken steps to bring ICOs under existing legislation but the fact is that in absence of an international framework it is difficult to truly regulate ICOs. One country can ban them but the internet will allow its citizens to simply look elsewhere.
This has allowed a market of substandard and even outright fraudulent ICOs to flourish. There have been a series of ICO “walk outs” where the so-called developers have taken the money raised and ran away with it. These scams have cost investors, particularly inexperienced investors, millions of dollars worth of cryptocurrency and represent a real threat to the ecosystem as a whole.
The problem is that it is very hard to maintain any level of quality control. Promising, legitimate projects are often overshadowed by low-quality ICOs with flashy advertising. The sad fact is that, for the moment, hype is king in the cryptocurrency world. There have been some attempts at self regulation, in the form of NEO and ICO incubators like Global Blockchain Technologies, but broadly fraudulent ICOs have been allowed to exist for some time now.
The problem is that while experienced investors and cryptocurrency enthusiasts will generally know what ICOs to avoid and they often make attempts to call-out suspect projects, investors will less experience are more likely to get drawn into the hype In part thanks to the media representation of cryptocurrency as a new gold rush. On the surface Google and Facebook have taken action to protect these inexperienced users.
The Cryptocurrency Ad Ban May Help To Stabilize The Market But Its Effect Will Be Limited
Given Google and Facebook’s reluctance to act over fake news it seems a little hypocritical of them to take action against ICOs. Setting that aside there are some important things to note. The first is that Google’s Ban actually affects a whole array of financial services that have somewhat shady connotations.
The announcement also seems to be targeting industries where there is a certain amount of unregulated criminal activities, specifically the line “Contracts for Difference, rolling spot forex, and financial spread betting will be required to be certified”. The implication here is that cryptocurrency advertisements may well be allowed once there is a robust regulatory framework to handle ICOs and cryptocurrencies in general.
It is unlikely that Google’s cryptocurrency ad ban will have any major impact on the cryptocurrency market. It is more about protecting Google itself from association with fraudulent or suspect projects
While many of the more suspect ICOs rely on flashy advertising to get their message across the majority of cryptocurrency enthusiasts get their news from Reddit or Twitter. This means that sub-par or fraudulent projects are normally plugged on social media, rather than through traditional advertising. This also forms the basis of the notorious pump and dump schemes.
Despite this the advertising bans on Google and Facebook will have some important effects. They will reduce the visibility of ICOs to new investors who may not yet be involved in the cryptocurrency space. This is important because its easier for ICOs to market “huge returns” to potential investors who are not yet acclimatized to the world of cryptocurrency.
The advertising ban may also reduce the overall impact of cryptocurrency on the public conscious. This will likely restrict the flow of money from new sources to some degree and could reduce the volume of trades, which might help give the bottlenecked Bitcoin and Ethereum networks a break
The Biggest Impact Of The Ban Will Be Mental
While the material effects of the ban will slightly reduce the visibility of cryptocurrency the bigger issue might be in encouraging a sort of siege mentality. Over the past few months it has felt like the entire world has turned on the cryptocurrency community and there have been some pretty major setbacks.
The Cryptocurrency market has been experiencing a general bear market since the bubble collapsed in January 2018 and seems to have stabilized just below the $8,000 mark. This general downtrend has a number of causes, most notably fears of further regulation and uncertainty surrounding the legality of trading cryptocurrency in a number of states. Bitcoin specifically has also seen a downward trend in value as investors diversify into multiple ICOs.
The Google advertising ban will add to a overall feeling of being attacked and could well continue to artificially deflate the value of cryptocurrency across the board as investors feel that their assets are under threat. On the other hand it will give the cryptocurrency community a chance to breathe. Lower prices and less exposure will begin to force out the “weak hands” and the investors who actually understand cryptocurrency world will be the ones who stay.
This has the potential to reduce the number of “victims” for scammers to target and hopefully begin to repair the damaged reputation that these suspect projects have caused. It should also help to give new projects that to rise based on their technical merits, rather than their advertising budget.
In the end the Cryptocurrency market has proven itself to be remarkably resilient and while Google’s advertising ban is a setback it is unlikely to prove fatal in the long term and it may even have some positive effects on the market.