More bad news rattled the cryptocurrency markets this week. Google has announced that it will no longer allow cryptocurrency-related ads on its platforms. Prices fell as the news spread and a message from the International Monetary Fund (IMF) pushing for a global regulatory crackdown isn't helping anything.
Google and Facebook control somewhere between 60 and 70 per cent of the online advertising market, so no one wants to be on their bad side. In a blog post yesterday, Google announced that it would follow in Facebook's footsteps and ban cryptocurrency ads from its network, beginning in June. The new policy applies to a range of financial services. In the crypto-sphere, Google will now prohibit promotions of "Cryptocurrencies and related content, including but not limited to initial coin offerings, cryptocurrency exchanges, cryptocurrency wallets, and cryptocurrency trading advice".
The move comes as Google and Facebook confront pressure to purge their networks of scams, misleading advertising and political propaganda. Cryptocurrencies are not necessarily scams by default, but US regulators have warned that there's a high risk of fraud in this market. A recent analysis found that 59 per cent of 2017's ICOs are have already failed or are on the verge of failing.
Few observers would claim that online advertising has played a key role in the rise of Bitcoin and other digital currencies, but it's almost certainly a factor in spreading fraudulent services to low-information audiences. Some enthusiasts online saw Google's decision as a good thing, but there's little doubt the move will slow the progress of building a legitimate industry around cryptocurrencies.
The price of Bitcoin fell over the last 24 hours from around $11,600 to $10,600, with a sharp decline on Wednesday night. Other reasons investors could be feeling the FUD include a blog post from the IMF that called on government regulators to implement new rules around cryptocurrencies due to their potential as a "major new vehicle for money laundering and the financing of terrorism". And it just so happens that US Congress held its first subcommittee hearings on ICOs today. The US House of Representatives Financial Services Committee began a session on "Examining Cryptocurrencies and ICO Markets" at 1AM AEDT, which was livestreamed. An archive of the stream can be viewed here.
Bitcoin has had a rough time over the last couple of months, failing to recover after dropping from a high of almost $25,000. As Bloomberg points out, Allianz Global Investors, a major European investment firm, declared Bitcoin "worthless" last week. "In our view, its intrinsic value must be zero," it concluded in a blog post. If I had a bitcoin for every time someone declared it dead, I'd be a rich man, but the cryptocurrency world has never seen the type of scrutiny and large-scale awareness that it faces today.