The Gray Area of Influencer Crypto Marketing
Navigating the dangers of marketing crypto via influencers
TL;DR
Lack of global regulation: There are currently no clear global regulatory guidelines for crypto marketing. This has resulted in a wide variety of marketing activities being conducted through a variety of channels, which can at times pose significant risks to investors.
Marketing execution method: Crypto marketing is mainly done by specialized agencies or marketing teams within each project. Marketing also takes various forms, including influencer marketing, in-house research, advertising in specialized media, community management, and event hosting. The process is often not disclosed, which can be problematic.
Calls for regulation and transparency: While some countries are making efforts to increase transparency in crypto marketing and establish legal guidelines to protect investors, global standards are yet to be set. Clear global regulation of crypto marketing is needed for a healthy market. At the moment, there is still heavy reliance on the ethical approach of individual projects.
No clear answer
"How far is too far for crypto marketing?" is a question that no one can answer with certainty due to the absence of universally clear regulatory guidelines.
As a result, crypto is marketed in various ways, mostly through marketing agencies and influencers. However, this marketing is done without third-party verification, which has caused great harm to investors in many cases.
Marketing can be carried out even in the pre-issuance stage, with no credible source of information regarding the project other than barely a roadmap. If the marketing agency or influencer fails to verify the project sufficiently at that stage, it can be the source of major harm further down the road.
How does crypto marketing work?
Generally, crypto marketing is done through specialized marketing agencies or directly by the marketing team within the Web3 project. Depending on the budget, it may include 1) influencer marketing, 2) research, 3) advertising in relevant media, 4) community management (Discord/Telegram, etc.), and 5) events. Especially in the case of influencer marketing and research, problems may arise as the content is often not labeled as paid advertising.
Of course, ad labeling for crypto marketing is not globally regulated, so it is not required in most countries. Even in countries with regulations, if the content itself does not target a specific country, there is no reason to label it as an ad because there are no global regulations. However, from an investor's perspective, it's impossible to distinguish whether the content is the result of independent research or paid advertising. In the end, transparent crypto marketing tends to lean heavily on ethical responsibility.
Crypto-marketing dispute cases
As shown in the table above, the main issue was that influencers outside of the blockchain market, such as singers and actors, advertised certain blockchain projects with no disclosure of compensation. This is because it is unusual for influencers from other fields to mention blockchain projects, unlike influencers active in the blockchain market, and it can be clearly perceived as advertising.
However, since influencers in the blockchain market frequently post opinions about the market and specific projects on their channels, it is difficult for investors to distinguish advertisements from personal opinions unless they are clearly labeled. This is especially problematic as the blockchain market is still developing, and investors tend to trust the judgment of trusted influencers rather than their own valuation of each project. Put simply, the mix of opinions and paid advertisements in influencers' channels makes it difficult for investors to get accurate information.
Countries with regulatory guidelines
With the growth of the blockchain market and the social impact of celebrity endorsements, France, the United Kingdom, and the United States are leading the way in establishing legal guidelines. The common goal of these regulations is increasing transparency in crypto marketing and protecting investors.
France has strict controls on crypto marketing, prohibiting celebrities and influencers from promoting Web3 projects without government authorization. In the UK, the Financial Conduct Authority (FCA) has published a checklist of advertising guidelines, warned against illegal financial promotions, and strengthened punishment for violations of strict regulatory guidelines. In the U.S., however, enforcement seems to be based on case law rather than specific guidelines or regulatory directives.
However, the illegal marketing of financial products is widespread even in relatively mature securities markets. It would be impossible for any one regulator to monitor and categorize all content across the myriad of channels. Even if possible, enforcement is highly unlikely, as there is currently no clear global regulation in place.
No clear answer yet
Many experts say that transparent crypto marketing will require clear regulations. The blockchain market is currently undergoing rapid regulatory change, including the approval of Bitcoin ETFs, the establishment of dedicated national authorities, and discussions on the securitization of individual coins. As more countries establish crypto marketing regulations, perhaps the global standard for crypto marketing will become clearer.
Nevertheless, there is no clear answer at the moment. Under current circumstances, reliance on the ethical approach of industry players is inevitable. Regardless, the lack of clear guidance in the gray area of crypto marketing should be a wake-up call to the industry.
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Disclaimer
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