In a notice issued on Tuesday, a warning was issued to consumers by the Central Bank of Ireland about the risks associated with crypto investments. It also referred to the ‘misleading’ advertisements on social media that are pushed by influencers. The central bank stated that the European Supervisory Authorities had organized a campaign and this warning was part of it. These authorities include the European Insurance and Occupational Pensions Authority, the European Banking Authority and the European Securities and Markets Authority. According to the Central Bank of Ireland, retail investors should consider cryptocurrencies as‘speculative and highly risky’.
It also warned people to be mindful of the misleading ads that can be found on social media, as influencers are being paid for advertising various crypto assets. The director general of financial product at the central bank of Ireland, Derville Rowland, said that there had been an increase in the level of aggressive promotion and advertisements of investments in crypto assets in Ireland as well as across the European Union. He said that before people buy crypto assets, they have to ensure that they are prepared to lose all the money they have invested. He added that investors need to be aware that there are no protections in place with this kind of investment, as in the case of investments in regulated products.
The warning from the central bank echoes that of the global lawmakers and regulators, who have spoken about influencers peddling various cryptocurrencies to the masses. The Spanish government had introduced regulations pertaining to ads regarding crypto services and investments in January. These regulations had included the products and services that are promoted by influencers. The Advertising Standards Authority (ASA) of the United Kingdom has also issued repeated warnings to crypto companies about their alleged violation of ads related to digital assets.
Influencers and celebrities in the United States had been associated with a number of initial coin offering scams that had occurred in the crypto space back in 2018. The Instagram account of Kim Kardashian posted a story in June 2021 about the ERC-20 token called EthereumMax(EMAX). This had pushed up the coin’s price by almost 99% before it fell and left many people in the red. Actor Ben McKenzie is one American celebrity who has pushed back against such high-profile endorsements via his platform. Due to the repeated warnings that have been issued about crypto ads and investments, a number of companies have chosen to shift their operations to Ireland.
Gemini, a renowned crypto exchange, had opened up an office in Dublin in early 2021 and had obtained a license for providing electronic money services. In September 2021, Binance had also set up three subsidiaries in Ireland. Likewise, exchanges like Kraken and Ripple had also given preference to Ireland for setting up their offices that would oversee their European operations. As it appears to be becoming a hub for crypto companies, it does not come as a surprise that the central bank has been pushed to take action.