The beginning of the end for #bitcoin? Maybe, on social media: Twitter is drafting a policy on ads for the volatile cryptocurrency and others like it after bans by competitors Facebook and Google, according to a person familiar with the matter.
Twitter hasn’t finalized its policy yet, the person said Monday. Facebook, based in Menlo Park, Calif., prohibits ads for financial products frequently associated with fraud, including cryptocurrency and initial coin offerings, while Mountain View, Calif.-based Google says it will block promotions for cryptocurrency and related products including trading advice starting this June.
While none of the companies have attempted so far to regulate user comment on the digital currencies, the advertising and sponsorship rules reflect heightened government scrutiny of cryptocurrency fraud. As the dollar value of the products has risen, so have scams to fleece investors of their cash. Bitcoin and its ilk have also become a popular payment medium for ransomware hackers who seize control of websites and digital properties, and they pose concerns for governments, which use sovereign currencies to preserve financial stability.
Regulating cryptocurrencies — which are generated, or mined, when networked computers validate transactions in blockchain, a secure ledger accessible worldwide by multiple parties — is a challenge. Bitcoin and similar products from Ethereum to Litecoin and Ripple are currently governed by a patchwork of federal and state rules, and addressing the gap in a way that protects average Americans may require Congress to pass new legislation, Securities and Exchange Commission Chairman Jay Clayton and Commodity Futures Trading Commission Chairman J. Christopher Giancarlo told lawmakers in early February.
“I want to make sure these are not used by bad guys, that they don’t turn into old Swiss numbered bank accounts,” Treasury Secretary Steve Mnuchin told the Senate Banking Committee in late January. It’s also important to ensure that consumers tempted by run-ups in prices — bitcoin surged 14-fold in 2017 — are aware of the risks, Mnuchin said.
While Congress will likely be reluctant to pass any new laws on cryptocurrency this year, with elections looming in November, the likelihood of action next year increases if Democrats wrest control of the House of Representatives from Republicans, said Jaret Seiberg, an analyst with Cowen Washington Research Group, which has tracked government policy for four decades.
“Capitol Hill appears wary with some key leaders even hostile,” Seiberg said. “That creates a political environment where scandals and missteps can lead to negative government response.”
A Democratic majority in the House, for instance, might give leadership of the subcommittee that oversees cryptocurrencies to Brad Sherman, a California Democrat who has criticized them sharply, Seiberg said.
“Cryptocurrencies are a crock,” Sherman told the House Subcommittee on Capital Markets, Securities and Investment during a March 14 hearing. Questioning what social benefits they provide, he noted that cryptocurrencies help terrorists and criminals move money and “allow a few dozen men in my district to sit in their pajamas on the couch all day and tell their wives they’re going to be millionaires.”
