Twitter has announced a ban on cryptocurrency ads.
The social media company’s announcement is more bad news in what has turned into several bad months for cryptocurrencies.
After a meteoric rise that sent Bitcoin above $20,000, the crypto has fallen back to earth. Bitcoin is currently trading below $8,000 and according to a CCN report, the broader cryptocurrency market cap is at risk of descending below the $300 billion mark.
Bitcoin’s sudden rise to prominence late last year thrust cryptocurrencies into the spotlight. The surge in interest and mainstream attention hasn’t been all good.
The soaring price of Bitcoin certainly caught the attention of world governments. That brought the specter of tighter regulations. Last month, we reported that Uncle Sam has suddenly become very interested in cryptoswith several members of congressional leadership say stricter oversight is on the way.
The US isn’t alone. In December, South Korea announced plans to tightly regulate cryptos with rules that could go as far as banning exchanges. Last fall, China prohibited trading cryptos on domestic exchanges and outlawed initial coin offerings. In February, it took things a step further, blocking all websites related to cryptocurrency and ICO trading, including foreign platforms, in an effort to crush the market completely. Australia has looked to regulate cryptocurrencies under anti-money laundering laws.
Twitter joins Facebook and Google in banning cryptocurrency advertising. According to a Reuters report, the prohibition will cover “advertising of initial coin offerings (ICOs) – crowdfunding used to raise cash by creating new coins – as well as token sales.”
The new policy, which will be rolled out over the next 30 days, will also ban ads by cryptocurrency exchanges and cryptocurrency wallet services, unless they are public companies listed on certain major stock markets.”
Social media platforms have spurned cryptocurrency advertising “to avoid giving publicity to potential fraud or large investor losses.”
“With the increasing number of ICOs coming to market, it is an impossible task for anyone, much less platforms like Twitter or Facebook, to keep on top of which ICOs and cryptocurrencies are genuine versus frauds,” Zennon Kapron, director of the financial consultancy Kapronasia, told Reuters. “Although certainly, ICO advertising must have been a significant source of revenue for Twitter, the repercussions of fraudulent activities just weren’t worth the risk.”
A little less mainstream interest might not be all bad for the crypto world in the long run. It will allow those committed to digital currencies to work out some of the kinks, including high transaction costs that have plagued Bitcoin. Some advocates argue increasing government scrutiny will ultimately be good for the cryptocurrencies, spurring innovation that increases privacy, security and anonymity in an effort to keep regulators out. On the other side of the coin, pro-government people say regulation will create a more stable marketplace and increase public trust, allowing cryptos to enter into the mainstream of the financial system.
Regardless, it appears the bloom is off the cryptocurrency rose, at least in the near-term.
Does this mean you should abandon Bitcoin and other cryptocurrencies completely?
Bitcoin has significant upside. BTC and precious metals both offer alternatives to government monopolized fiat currency. They play a similar role as free market, sound money. But as with any financial instrument, there are potential pitfalls. Diversifying your cryptocurrency portfolio with precious metals can help mitigate some of the potential downsides and put you in an overall stronger financial position.
Just consider the old adage – you don’t want to put all of your eggs in one basket.