Facebook changed its mind.
ON SECOND THOUGHT... In January, Facebook announced a new policy banning companies from advertising initial coin offerings (ICOs), binary options (investments where the return is either a fixed amount or nothing at all), and cryptocurrencies on the platform. On Tuesday, Facebook reversed that policy; it will now allow "pre-approved advertisers" to promote cryptocurrency products and services on the platform. Companies must fill out an application and provide requested background information to earn Facebook's approval to buy cryptocurrency ads. Ads promoting ICOs and binary options are still banned.
STOPPING SCAMS. Facebook's initial decision to stop selling cryptocurrency ads was an attempt to rein in the many companies it claimed were misleading or deceiving users. And, truly, the crypto world has no shortage of scammers — according to CoinDesk, an official from the U.S. Federal Trade Commission (FTC) told audience members during a crypto workshop on Monday that consumers lost an estimated $532 million to crypto scams between January and February of 2018 (the FTC defines scams as "deceptive investment and business opportunities, bait-and-switch schemes, and deceptively marketed mining machines"). By the end of the year, the FTC estimates that figure will soar to $3 billion.
WHAT WE KNOW & WHAT WE DON'T. We don't know if Facebook's revised policy will prevent scammers from taking advantage of the platform's users. Also unclear: how thoroughly Facebook plans to screen advertising applicants.
What is clear is who will immediately benefit from the policy change: Facebook, which is once again free to generate ad revenue from crypto companies. Hard to say what Facebook was earning from those companies prior to January's ban, but Google — the internet's other advertising giant —generated an estimated $25 million in ad revenue from ICOs alone in 2017. Facebook might invest some of its own money into the crypto realm, as well, with rumors swirling that it could decide to buy digital currency exchange CoinBase.
Facebook also has less competition for crypto ad dollars now. In March, Twitter announced its own ban on certain cryptocurrency ads. That same month, Google announced it was updating its own policy to ban ads promoting cryptocurrencies, ICOs, and binary options. Google's update just went into effect this month, so... is that a coincidence? Or smart timing by Facebook?
READ MORE: Updates to Our Prohibited Financial Products and Services Policy [Facebook]