On Wednesday (May 8), Facebook announced a few important updates to its advertising policies related to “blockchain, cryptocurrency and financial products and services.”
The Origin of the Outright Ban on Crypto-Related Advertising
On 30 January 2018, Facebook announced that it had created a new policy (called “Prohibited Financial Products and Services”) that disallows ads that “promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings and cryptocurrency.” It acknowledged at the time that this complete ban on all crypto-related ads was perhaps a bit too drastic a measure:
“This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices, and enforcement will begin to ramp up across our platforms including Facebook, Audience Network and Instagram. We will revisit this policy and how we enforce it as our signals improve.”
Allowing Crypto Ads but Only From Pre-Approved Advertisers
On 26 June 2018, Facebook said that it had updated its “Prohibited Financial Products and Services Policy” to “allow ads that promote cryptocurrency and related content from pre-approved advertisers” whilst still prohibiting “ads that promote binary options and initial coin offerings.” Any business wishing to advertise crypto-related products and services had to prove that it was eligible by filling out a form called “Cryptocurrency Products and Services Onboarding Request” as well as as provide proof of ownership of the domain(s) associated with the application.
Facebook’s Focus on Blockchain and Cryptocurrency
The first time we got a hint of Facebook’s interest in cryptocurrency was on 4 January 2018 when CEO Mark Zuckerberg said in a post on his Facebook page that one of his personal missions for 2018 was to learn more about this subject.
And then in May 2018 the world first found out that Facebook was getting serious about blockchain technology. On 8 May 2018, in a post on Facebook, David Marcus, the former head of Messenger, who was at that time also a board member (since December 2017) of crypto exchange Coinbase, revealed that he was leaving that role to set up a new group focused on exploring applications of blockchain technology across the whole of Facebook.
On 13 December 2018, Cheddar reported that Facebook’s blockchain group is planning to “potentially disrupt the entire payments industry”:
“At a private dinner Facebook hosted during a recent crypto conference, one attendee told Cheddar that Facebook employees pitched the idea of creating a decentralized digital currency for the social network’s 2 billion users.”
Several days later, Bloomberg reported that Facebook was creating its own cryptocurrency (a stablecoin) for money transfers within its highly popular messaging app WhatsApp. Roughly, two months later (28 February 2019), the New York Times confirmed Bloomberg’s earlier story, and said that, according to its sources, this project was “far enough along that the social networking giant has held conversations with cryptocurrency exchanges about selling the Facebook coin to consumers.”
Then, around one month ago, Nathaniel Popper, one of the two journalists who wrote the report in the New York Times, provided this update (on Twitter) about Facebook’s cryptocurrency project:
Update on Facebook's cryptocurrency: Sources tell me that Facebook is now looking to get VC firms to invest in the Facebook cryptocurrency project we reported on earlier this year. I hear they are targeting big sums — as much as $1b.
— Nathaniel Popper (@nathanielpopper) April 8, 2019
Given that one of the big allures of blockchain projects is the decentralization, getting outside investors could help Facebook present the project as more decentralized and less controlled by Facebook.
— Nathaniel Popper (@nathanielpopper) April 8, 2019
One person I spoke with said that Facebook is talking about using the money as collateral for its cryptocurrency. Facebook has been designing the coin to keep a stable value, pegged to a basket of foreign currencies held in bank accounts.
— Nathaniel Popper (@nathanielpopper) April 8, 2019
And finally, one week ago, the Wall Street Journal reported that Facebook was “recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system,” and that the core part of this initiative (code-named “Project Libra”) is “a digital coin that its users could send to each other and use to make purchases both on Facebook and across the internet.” Furthermore, this report said that, according to people familiar, Facebook was talking to “financial institutions including Visa Inc., Mastercard Inc. and payment processor First Data Corp.” about investing in this project.
Facebook’s Latest Thinking on Crypto Ads
On Wednesday (May 8), Facebook announced that since June 2018 it has been listening to “feedback”, and that while those wishing to run ads that promote cryptocurrencies still need pre-approval, it was no longer demanding “pre-approval for ads related to blockchain technology, industry news, education or events related to cryptocurrency.” It also said that it will “continue to ban ads for initial coin offerings (ICOs) as well as ads for binary options.”
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