Zuckerberg wrote, “With the rise of a small number of big tech companies—and governments using technology to watch their citizens—many people now believe technology only centralizes power rather than decentralizes it. There are important counter-trends to this—like encryption and cryptocurrency—that take power from centralized systems and put it back into people’s hands. But they come with the risk of being harder to control. I’m interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services.”
You’d be forgiven for coming away from that statement believing Facebook is gearing up to go big in cryptocurrency (FaceCoin? CoinBook?).
Facebook vp of messaging products David Marcus is on the board of directors of digital currency exchange Coinbase. Facebook board members Marc Andreessen and Peter Thiel have made significant investments in cryptocurrency through Andreessen Horowitz and Founders Fund, respectively. Yet, despite all of those ties to the industry, Facebook product management director Rob Leathern announced in a blog post Tuesday that the social network had introduced “a new policy that prohibits ads from promoting financial products and services frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings or cryptocurrency.”
The new policy covers Facebook, Instagram and the Facebook Audience Network.
Leathern indicated the ban would not necessarily be permanent, calling the social network’s new policy “intentionally broad” and saying Facebook would work to “better detect deceptive and misleading advertising practices.” Facebook’s stance, as of now, is that it wants people to “learn about new products and services through Facebook ads without fear of scams or deception. That said, there are many companies that are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith.”
Ryan Taylor, CEO of open-source peer-to-peer cryptocurrency Dash, was disappointed with Facebook’s move, saying, “There is clearly an issue with digital token advertising overstepping the bounds of security promotion laws, with many projects going as far as claiming guaranteed returns and laying out expectations of investment gains.”
“Many ads even feature countdown timers and bonus deadlines that discourage investors from performing proper due diligence,” he said. “This behavior is clearly unfavorable for consumers. However, I believe that a blanket ban on all digital currencies is an overreaction.”
David Brill, CEO of Centra Tech, a company that offers blockchain products including prepaid Centra Cards that allow holders to load cryptocurrency onto them and convert it into fiat in real time, seemed to believe Facebook hadn’t permanently closed the door on his industry.
“While we appreciate that some advertising platforms may be circumspect about accepting advertisements for cryptocurrencies, use of cryptocurrency is growing exponentially around the world, and products like ours continue to see rapid adoption,” he said. “We believe that as the use cases for blockchain and cryptocurrencies continue to grow, advertising platforms will re-evaluate their views.”
Hedge-fund manager, entrepreneur and venture capitalist James Altucher, who has become the unofficial “face of bitcoin,” took the news from Facebook in stride, although the fact that he was on the board of directors at Facebook advertising and marketing developer Optimal (which was acquired by Brand Networks in October 2013) when Leathern was that company’s CEO may have helped cushion the blow.
Altucher told Peter Kafka of Recode via email: “I think this is a very good move for Facebook. There are many scams and illegitimate services out there. … My hope is that a lot more focus in the crypto space will be on education services. Something like 70 percent of bitcoins are owned by men under 35. It’s about time that ads and services start being focused on the enormous number of people that simply need to learn what a bitcoin is. And again, kudos to Facebook for trying to clean up all of the garbage out there. This is an enormous opportunity but, like any new financial opportunity, the schemers and crooked charlatans are having a field day.”