Crunchbase News has learned from a source familiar with the company that twitter will place a ban on advertisements for blockchain tokens and so-called initial coin offerings (ICOs). The person offered no further information on the company’s timeline or proposed implementation of the ban. This validates a story from Sky News, which said the crypto-ad interdiction will begin within the next two weeks.
This decision seems to have been in the works for some time. Crunchbase News reached out to Twitter on February 9th of this year and was told that the company was still assessing its stance on cryptocurrency ads at that time.
More than one month later, with the story from Sky News and a confirmation from a well-informed source, it looks like the result of that rumination will be to bring down the ban hammer.
The Great ICO Ban
Twitter isn’t alone either, as many tech giants are foregoing ad revenue ostensibly in the name of protecting users from financial exploitation. Facebook was among the first major platforms to ban blockchain ads back in January. Last week, Google announced that it would ban ads for certain financial products, including binary options and “[c]ryptocurrencies and related content” including wallets, ICOs, exchanges, and trading advice.
According to an analysis from ReCode, companies in the crypto space are now “shut out of 70 percent of the world’s digital ad market,” when accounting for Facebook, Google, Alibaba, Baidu, and Tencent’s recent bans.
This may not bode well for existing cryptocurrency companies or upstarts looking to raise an ICO, a popular fundraising mechanism among those looking to finance blockchain projects.
In previous reporting and analysis, Crunchbase News found that ICOs delivered at least 3.5x more capital to blockchain startups than traditional venture capital funding rounds have since 2017. In other headwinds news, the Securities and Exchange Commission (SEC) has “dozens” of investigations into companies that raised ICOs. And, in an effort to comply with existing regulations, CoinDesk suggests that many founders are beginning to issue tokens under SEC Regulation D exemptions. The exemption stipulates a 12-month lock-up period where securities can’t be traded, which will slow investors’ sprint to liquidity at cryptocurrency exchanges—one of the few merits tokens claimed over traditional equity shares.
Taken together, market and regulatory forces may finally start to cool the heels of this very hot sector.
Illustration: Li-Anne Dias