The Republic of China Virtual Currency Commercial Association (Taiwan VASP Association) recently announced self-regulatory norms, which, after coordinating with the Financial Supervisory Commission, have been submitted for archiving. After the implementation of Taiwan VASP regulation, panic arose among many local employees of overseas exchanges, investment influencers, trading groups, and media, fearing that engaging in related business and advertising activities would violate laws. Chain News refers to the customer protection self-regulatory norms established by the VASP Association, which detail advertising solicitation, perhaps providing insights on the Financial Supervisory Commission's boundaries regarding 'advertising solicitation' from the association's self-regulatory perspective.
Note: The following norms are limited to the self-regulatory guidelines for members of the Taiwan VASP Association and do not represent other groups.
(Announce risk control standards! The Taiwan Virtual Currency Commercial Association has published self-regulatory norms; these behaviors will be monitored in transactions)
Definition of cryptocurrency advertising solicitation
Definition of advertising solicitation: 'Advertising, business solicitation, and promotional activities refer to the use of the following media, promotional tools, or methods to transmit, disseminate, promote, solicit, or sell to unspecified persons for the purpose of facilitating business and related matters.'
Media included in advertising solicitation
Brochures, posters, advertisement drafts, press releases, letters, presentations, investment brochures, insurance proposals, public offering documents, stickers, calendars, phone books, or other printed materials.
Television, movies, telephone, computers, faxes, mobile phone text messages, radio, broadcasting stations, slides, ticker tapes, or other communication media.
Billboards, banners, signs, arches, advertisements on buses or other vehicles, or any other form of static or active tools and facilities.
Internet and electronic billboards related to the public domain, emails, electronic videos, electronic voice or other electronic communication devices.
Holding on-site seminars, forums, briefings, exhibitions, interviews, or other public events.
Any other forms of advertising, business solicitation, and promotional activities.
What behaviors constitute advertising solicitation?
When publishing, broadcasting advertisements, and engaging in business solicitation or promotional activities (hereinafter referred to as 'advertising solicitation activities'), relevant laws and regulations must be adhered to.
Engaging in advertising, business solicitation, and promotional activities should adhere to general social morals, principles of honesty and credit, protect customers' interests, and maintain a fair virtual asset trading market, following the principles below:
Advertisements produced should carefully consider their impact on the investing public to avoid misleading their judgment.
Advertisements introducing the price situation of virtual assets should avoid excessive or arbitrary subjective inferences.
When disclosing the content of virtual assets or services involving interest rates, fees, compensation, and risks, it should be expressed in a balanced and prominent manner; if there are written documents, they should be in the same font size and color. The warning font size in print advertisements should not be smaller than the smallest font size in other parts of the same advertisement and should be prominently printed in bold to ensure visibility to the general public during quick reading of related advertisements.
For audio advertisements, in addition to revealing messages by voice, warnings must be displayed in easily recognizable fonts for at least five seconds, and the conveyed message should be clear and unambiguous.
Members must not engage in false, fraudulent, concealed, or speculative behavior or any other actions that may lead others to be misled during advertising solicitation activities and must ensure the truthfulness of their advertising content. Their obligations to clients must not be lower than the content of the aforementioned advertisements and the information or explanations provided during business solicitation or promotional activities.
Behaviors that cannot appear in cryptocurrency advertisements
Advertisements that violate or conflict with relevant laws or regulations regarding virtual asset platforms and trading businesses or that damage industry reputation.
Impersonating or using names similar to those familiar to the public to confuse customers.
Spreading advertisements that damage the business reputation of others for competitive purposes.
Concealing important facts or having other obviously exaggerated or biased circumstances, which may mislead or deceive the investing public.
Arbitrarily providing subjective investment information.
Offering predictions or guarantees of investment profits for individual virtual assets' price increases or decreases.
Advertising content promoting in a way that may undermine the overall industry reputation.
Using inaccurate newspaper or magazine reports as advertising content.
Advertising that involves profit or investment performance without simultaneously reporting its risks for balanced reporting.
Involving the use of superlative terms like 'lowest', 'only', 'best', 'lifetime', or similar highest-level expressions in advertisements.
The price, quantity, quality, content, lottery method, date, etc. of promotional gifts in advertisements do not match reality. Or failing to clearly state the duration, number of participants, quantity, and conditions for participation in the gift activities.
The layout, position, and font size of important trading information published are disproportionately displayed, leading to misinterpretation.
Other actions that violate laws or regulations prohibited by the competent authority.
Indirect restrictions on non-compliant overseas operators
Interestingly, the self-regulatory norms list a clause to prevent indirect advertising, which may hinder Taiwanese operators who invest in overseas exchanges or collaborate with non-compliant overseas exchanges from soliciting business with foreign operators.
Members may not assist those who have not completed anti-money laundering compliance declarations in advertising or soliciting business in our country under their own name or through directly or indirectly controlled third parties.
Members may publicly announce their affiliated companies obtaining qualifications or licenses to engage in virtual asset platform and trading operations overseas on their operating platforms, but the announcement must not involve business solicitation.
Will there be consequences for media, influencers, and KOL conducting advertising solicitation for non-compliant exchanges?
News media, influencers, and KOL accepting advertisements from non-compliant operators may face multiple impacts, especially after the implementation of the Taiwan VASP Association self-regulatory norms:
1. Legal risks
Possibility of legal violations: Although the self-regulatory norms of the VASP Association mainly target members, if the Financial Supervisory Commission references these norms for legislative amendments or stricter enforcement in the future, relevant practitioners may face legal liabilities for allegedly assisting in illegal business solicitation.
Regulatory pressure: In the future, if regulations regarding advertising solicitation extend to advertising platforms or promoters, media and KOL may be required to conduct stricter reviews of advertising content and may even bear joint liability.
2. Reputation risks
Decline in public trust: Accepting advertisements from non-compliant operators may be seen as not valuing investor protection, damaging their professional image in the public's mind.
Damage to brand image: If an advertisement is proven to be misleading, it may lead the audience to lose faith in the media or KOL's brand and even face community backlash.
3. Economic impact
Reduced cooperation opportunities: As more operators comply, media and KOL may need to shift towards accepting advertising from compliant operators, potentially losing some revenue sources due to market consolidation in the short term.
Market reshuffling: Advertising budgets from compliant operators may flow to media and KOL that better meet the standards, altering the competitive landscape of the industry.
4. Self-regulatory pressure
Media and KOL may need to proactively adjust internal standards, for example:
Strictly reviewing the compliance of partners.
Clearly distinguishing between advertising and content, ensuring transparency.
5. Future opportunities
Competitive advantage through compliant cooperation: If media or KOL actively cooperate with compliant operators, they can establish a more credible market position and attract more compliant advertisers.
The role of educating investors: Media and KOL can take this opportunity to play a role in educating investors, emphasizing the importance of compliance and further enhancing professionalism.
News media, influencers, and KOL accepting advertisements from non-compliant operators may face challenges in the short term due to restricted income and cooperation, but in the long run, collaborating with compliant operators and adhering to norms will help reduce legal and reputational risks, creating a more stable market image. For those continuing to promote high-risk advertisements, careful consideration of their potential impact on market confidence and personal career is necessary.
This article discusses where the boundaries of cryptocurrency advertising solicitation lie. Will the self-regulatory norms for exchange advertising affect media, influencers, and KOL? Originally appeared in Chain News ABMedia.