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What We Know About Google Ads Allegedly Blacklisting ‘Ethereum’ as a Keyword

Crypto startup claims that Google Ads has blacklisted keywords mentioning Ethereum.

 

On Jan. 10, Serbia-based smart contract auditing startup Decenter reported that Google has blacklisted keywords mentioning Ethereum (ETH) on its advertising platform, Google Ads.

Google Ads: We can’t confirm that Ethereum is eligible to trigger ads, see our policy

Specifically, the startup tweeted that they saw “a hard stop” on Google Ads containing the keyword “Ethereum” starting from Jan. 9. Decenter also tagged the advertising platform’s official account in the tweet, asking whether they had introduced any new policy changes.

The Google Ads account then replied, stating that cryptocurrency exchanges targeting the United States and Japan can be advertised on the platform, while targeting other countries could be the reason for the ad rejection. While Decenter is based in Belgrade, Serbia, it does not provide services as a crypto exchange.

Further, when the startup explained that they are a group of developers doing smart contract security audits, and that they were seeing an error message when trying to use “ethereum development services” and “ethereum security audits” as keywords, the official Google Ads account answered that they were not able to preemptively confirm that the “Ethereum” keyword was eligible to trigger ads.

“We’d recommend that you refer to the ‘Cryptocurrencies’ section of our policy on Financial products and services.”

In the referred section of their policy, Google Ads states that “due to the complex and evolving nature of regulations related to cryptocurrencies and related products and services,” the company only allows advertising mining-related services and cryptocurrencies exchanges. The latter is approved for promotion only in Japan and the U.S., however.

The Google Ads guide then explicitly mentions that ads for initial coin offerings (ICOs) and similar services, along with “ad destinations that aggregate or compare issuers of cryptocurrencies or related products” — such as crypto trading signals — are prohibited.

Blanket ban followed by relaxation: Brief introduction to the relationship between Google and crypto

In 2018, after a lengthy period without regulation, Google’s politics regarding cryptocurrencies became significantly stricter. Specifically, on March 14, the search engine giant updated its financial services policy, announcing that it was going to ban all cryptocurrency-related advertising of all types come June.

To justify its crypto ad ban, Google said that it was protecting its customers from fraudulent offerings, including, but not limited to, “initial coin offerings, cryptocurrency exchanges, cryptocurrency wallets, and cryptocurrency trading advice.” The company’s executive, Scott Spender, told CNBC at the time:

“We don’t have a crystal ball to know where the future is going to go with cryptocurrencies, but we’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution.”

The move was later described as “unfair” and “troubling” by industry insiders. Interestingly, the news of a crypto ad ban came just days after crypto advertisers using Google Adwords reportedly noticed a drastic drop in the number of views of their advertisements. However, as per Finance Magnates, Google Ads had, at that time, denied any change in their financial services regulations that would block cryptocurrency- or ICO-related advertisements.

Further, on Sep. 25, the U.S. tech giant partly backpedalled on its blanket ban of ads. Google announced it was set to update its ad policy in October, reallowing some crypto businesses to advertise on its platform.

According to the official statement, starting in October, Google would allow registered crypto exchanges to advertise on its Google Adwords platform, targeting the U.S. and Japanese audiences:

“Advertisers will need to be certified with Google for the specific country in which their ads will serve. Advertisers will be able to apply for certification once the policy launches in October.”

The cryptocurrency section of the Google Ads’ policy has since been updated, but the precise amount and nature of crypto businesses that have since been allowed to advertise there remains unknown.

Decenter: “Ethereum” keywords isn’t working for other companies too, Google Ads is to provide a definite explanation within 48 hours

After communicating with Google Ads over Twitter, Decenter took to Reddit to ask the r/Ethereum subreddit users about the alleged policy changes. In the post, the team specified that they have tested keywords for “ethereum smart contract audits” and “eos smart contract audits” and found that only the EOS-referenced keyword showed ads.

The community largely reacted by criticizing Google’s position as a neutral third party. The top comment reads:

“Google has various political and economic agendas, and they are quite willing to use their various services to promote their preferences. AdSense and YouTube are notorious for this, but there have been some incidents regarding the Play Store as well.”

Other users mostly cited the previous blanket ban and the abundance of scam projects as potential reasons for Google Ads to prohibit such advertisements. Some users reported having problems with other crypto-related keywords besides “Ethereum.” “I have been unable to use the ‘bitcoin’ (or even ‘blockchain’) on my google ads as well,” one of the comments read.

When reached by Cointelegraph, Decenter CEO Andrej Cvoro said that there are other startups which started having difficulties with the “Ethereum” ad keyword this month:

“We are aware of at least five different competitors that used to have Google Ads shown for search phrases such as ‘Ethereum smart contract audit,’ all of which stopped showing at the same time.”

When asked to clarify the names of the companies allegedly dealing with the same problem, Cvoro replied that he was not able to answer that “with certainty”:

“All we know is that there are other companies that used to have their ads displayed for search phrases such as ‘Ethereum smart contract audits,’ which is no longer the case. Due to the intricacies of Google Ads keyword setting mechanism, this does not necessarily mean that these companies had explicitly entered ‘Ethereum’ as one of their keywords, although there is a good chance that this is the case.”

Thus, according to Cvoro, the ads are still showing for other crypto-related tags, but “Ethereum” does not seem to be working — neither for those companies, nor for Decenter itself. That, the startup’s CEO adds, suggests that Ethereum has indeed been blacklisted:

“For example, ‘X smart contract audit’ phrase will show several different ads for any X, except when X = ‘Ethereum.’ Furthermore, we are currently not able to find a single search phrase involving the term ‘Ethereum’ that shows any ads on Google, which strongly implies that ‘Ethereum’ as a keyword has been blacklisted (intentionally or otherwise).”

Indeed, a Google search for “EOS smart contract audit” seems to bring up a few ads — including Decenter and similar startups — while the search engine does not show any ads when “Ethereum smart contract audit” is googled.

However, Cvoro does not link the blacklisting to the previous Google restrictions regarding crypto-related ads, as his company allegedly did not face such problems with the keyword “Ethereum” even during the time the ban was fully active:

“We don’t think this is directly related to Google’s blanket ban on cryptocurrencies from the last year. That is something that we have been aware from the very beginning of our Google Ads campaign, but none of our ads were directly (and oftentimes not even indirectly) related to cryptocurrencies, so they were going through the manual reviews even when they were initially put on hold by the algorithm. So what is happening now is different in a sense that keywords containing ‘Ethereum’ aren’t passing manual review anymore, which doesn’t seem to be the case for other blockchain-related terms or phrases.”

On Jan. 15, Decenter received an email from the Google Ads team, the company told Cointelegraph. The answer was originally written in Croatian, but the startup has shared their English translation of the brief statement:

“Thank you for sending an inquiry about the status of your Google Ads with key phrases that contain the term ‘Ethereum’ as one of the keywords.

“Due to how sensitive it is to advertise products and/or services related in any way to cryptocurrencies, I have directly contacted the responsible department with a request for a detailed explanation of why your ads are not showing for the mentioned keywords.
Please be patient and I will get back to you with a final solution within 48 hours.”

Cointelegraph will continue to report on the developments of this story further when more information becomes available. Cointelegraph has also reached out to Google for further comment, but the company has not replied as of press time.

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Crypto Platform Tron Hires Former SEC Attorney as First Chief of Compliance

The ex-SEC attorney David Labhart will also act as co-general counsel for the platform.

Blockchain platform TRON has hired a former United States Securities and Exchange Commission (SEC) supervisory attorney as its first chief compliance officer. The company has revealed this to Cointelegraph in a press release on Jan. 9.

David Labhart, who previously worked as an attorney for the U.S. regulator, will also take on the role of co-general counsel at the company.

TRON, along with its associated TRX token, has built a major presence over the past year, in part due to the continued, and at times controversial, publicity efforts centred around CEO Justin Sun.

Designed to offer an alternative platform for decentralized applications (DApps) to Ethereum, TRON celebrated its one millionth user account last month.

TRX has risen 6.4 percent in the past 24 hours according to CoinMarketCap data, making it the best daily performer in the top twenty cryptocurrencies by market cap.

Evolving regulatory compliance obligations remain an issue for cryptocurrency entities serving both the U.S. and most other major markets. As Cointelegraph reported, some businesses such as crypto exchange Bittrex have opted to split their operations in order to segregate U.S. users, who are bound by different rules.

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Kraken Received 3 Times More Law Enforcement Requests in 2018

Cryptocurrency exchange Kraken has revealed that it has received three times more law enforcement requests in 2018 compared to 2017. The overwhelming majority of requesting authorities is in the US. 


A Chokepoint for Law Enforcement

San Francisco-based cryptocurrency exchange Kraken has released an infographic displaying the increasing number of law enforcement requests received in 2018. As it turns out, the bear market is not the only thing to be concerned with.

Evidently, the exchange has received 475 law enforcement requests in 2018 – a number three times larger compared to 2017.

The overwhelming majority of requests are coming from authorities in the US, with the Homeland Security Investigations (HSI) leading the march with 91. The FBI has issued a total of 67 subpoenas, followed by the Drug Enforcement Administration (DEA) with 40.

“You can see why many businesses choose to block US Users. Cost of handling subpoenas (regardless of licenses) is quickly becoming a barrier to entry,” tweeted the exchange.

It’s noteworthy that back in April, Kraken’s CEO and co-founder Jesse Powell, expressed his thoughts on the matter of information requests on behalf of lawmakers:

Having the kind of requested information “on hand” is not the same as having the resources to compile it neatly to fit to the framework of the request…

‘Cost Are Passed onto the Users’

As seen on the infographic, there are 11 different departments in the US alone who are looking to enforce their regulatory framework upon the cryptocurrency market.

Commenting on the matter was the host of CNBC’s Cryptotrader Ran NeuNer, who commented:

The cost of doing Crypto business in the USA as disclosed by Kraken. There are so many different and disjointed departments all looking to enforce their little piece of jurisdiction – ultimately these costs are passed onto the consumer.

What do you think of the increasing number of subpoenas issued against US users? Don’t hesitate to let us know in the comments below!


Images courtesy of Shutterstock

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Crypto Assets to Be Regulated Differently in the US, Potential Impact on Industry

The United States government could regulate crypto assets and tokens differently than stocks and traditional assets.

The United States government could regulate crypto assets and tokens differently than stocks and traditional assets by altering the existing regulatory framework on securities.

On Dec. 22, CNBC reported that two congressmen — Warren Davidson and Darren Solo — have introduced a bipartisan bill entitled “Token Taxonomy Act,” in an effort to prevent over-regulation in the cryptocurrency space.

“In the early days of the internet, Congress passed legislation that provided certainty and resisted the temptation to over-regulate the market. Our intent is to achieve a similar win for America’s economy and for American leadership in this innovative space,” said Davidson.

When passed, what sort of impact could the bipartisan Token Taxonomy Act have on the cryptocurrency and blockchain sector?

More clarity, exactly what the industry needs

In a statement, the Blockchain Association — a Washington, D.C.-based non-profit trade association that represents many of the biggest companies in the cryptocurrency industry such as Coinbase, Circle and Digital Currency Group — said that the bill provides a definition to crypto assets and digital tokens that exclude them from being recognized as a security.

Throughout the past two years, many blockchain projects have left the U.S. market to pursue token sales in regions like Switzerland and Singapore, which have lenient and flexible policies regarding initial coin offerings (ICOs).

By providing a clear guideline on the regulatory nature of tokens and digital assets, the bill encourages blockchain projects to remain within the U.S. market and contribute to the growth of the local cryptocurrency and blockchain sector.

The vast majority of token sales and ICO projects — apart from a select few like Telegram that have reportedly conducted a private token sale with the approval from the U.S. Securities and Exchange Commission (SEC) — have disallowed investors in the U.S. to participate in token sales due to the ambiguity in existing securities laws.

Even projects such as 0x (ZRX) that have been listed by a U.S.-based strictly regulated cryptocurrency exchange Coinbase, which clears the project from being considered a security, did not allow investors in the country to contribute to the ICO.

“With these terms clarified, we can police bad actors while encouraging the good ones, giving US-based innovators the framework they need to build next-generation technologies and services here rather than doing that valuable work overseas,” the Blockchain Association said.

The bill also offers clarity on the taxation policy surrounding cryptocurrencies for the first time in the market’s history, eliminating the friction between blockchain networks and users.

Currently, users in the U.S. are required to declare capital gains taxes on all cryptocurrency transactions — small or big — because the Internal Revenue Service (IRS) of the United States federal government has recognized cryptocurrencies as a form of property.

Although the bill does not aim to alter the recognition of cryptocurrencies as a property, it imposes an exemption for capital gains taxes on transactions that do not exceed $600, deeming them as tax-exempt exchanges.

The Blockchain Association added:

“Also, this legislation includes provisions that would address issues with the tax treatment of tokens. In 2014, the IRS declared that ‘virtual currencies’ be treated as property, which means capital gains taxes need to be calculated for all transactions. This adds tremendous friction to decentralized networks. The legislation addresses this by providing a de minimis exemption for gains less than $600 and allowing for tax-exempt like-kind exchanges.”

Decentralization is key

The bill does not encourage the SEC and other enforcement agencies to acknowledge all types of tokens and ICO projects as non-securities. It still allows the SEC to exercise authority over tokens that are considered securities, based on a newly established definition and guideline.

On June 14, the SEC’s Director of the Division of Corporate Finance Bill Hinman said that a key factor in determining whether a token is considered a security under existing regulations is the level of decentralization of the project.

If a blockchain network is sufficiently decentralized and no central party has control over the majority of the project’s elements, including its monetary policy and development, the SEC director said in a speech that the native token of the blockchain network cannot be considered a security under existing regulations. Hinman said:

“If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract. Moreover, when the efforts of the third party are no longer a key factor for determining the enterprise’s success, material information asymmetries recede.”

On that front, the SEC and the lawmakers behind the bill are in agreement that, as long as a security is sufficiently decentralized, it should be able to continue on without the interference from the authorities.

When passed, the bill is expected to allow both the token issuers and investors to better evaluate whether a token is recognized as a security or not, based on the newly amended securities policies. The bill could also encourage more companies to register with the SEC to distribute securities through the issuance of tokens in a private sale.

In the upcoming months, the Blockchain Association, the companies represented by the non-profit organization and U.S. regulators are set to cooperate in improving the bill and move it forward to gain the approval from the House and the Congress.

For a bill that has only been in the making for several months, the Blockchain Association said that it is not perfect in many ways. But, throughout 2019, industry leaders, experts and lawmakers will work together to solidify policies surrounding the cryptocurrency and blockchain space.

“Like all legislation in the early stages, we expect this bill isn’t perfect yet. However, what excites us is that it was proposed by a bipartisan team, demonstrating a vision for innovation and responsibility that is shared across the aisle. With the new Congress starting in January, we hope digital tokens will be an idea that we can build upon. We want to work together to debate the key issues, ensure adequate consumer protection, and work toward advancing legislation that represents our collective views,” the association stated.

Crypto tax policy reform needed

Cryptocurrencies like Bitcoin are fundamentally, structurally and conceptually different than stocks and traditional forms of assets. As such, the Bitcoin market behaves and moves differently than most stocks with extreme volatility and rapid price movements, mostly because the market is open for 24 hours a day for investors in the global digital asset exchange market.

The problem with cryptocurrencies — or with any emerging asset class in its infancy — is that an investor could record a 300 percent gain on paper by the year’s end and lose all of the profits in the following year.

Because losses are not carried across to the next year and crypto taxes are calculated in the same way as stocks and properties, the mismanagement of a cryptocurrency portfolio could lead to a big tax bill for investors.

On Dec. 21, the Wall Street Journal reported that investors could use certain strategies to lower taxes on cryptocurrency investments, such as selling and repurchasing crypto assets.

Without the implementation of such strategies, the aggressive approach of the IRS to collect taxes from crypto investors — as seen in the federal court order that demanded Coinbase to provide information on about 13,000 cryptocurrency trading accounts worth more than $20,000 between 2013 and 2015 — could affect many investors in the future.

Currently, the IRS is evaluating tens of thousands of trading accounts that traded between 2013 and 2015 to potential charge capital gains taxes on cryptocurrency investors. Investors that do not have the know-how on reducing tax rates could get hit hard by the IRS in the future, especially given that the tax policy around crypto remains identical with that of stocks and properties.

If the bill gets passed and a new definition is provided to crypto assets, most areas of the asset class, including taxation, are likely to be altered.

From 2017 to 2018, Bitcoin increased by around 1,900 percent, from $1,000 to $19,500. Since then, Bitcoin has dropped to $4,000 by around 85 percent. For an asset class that tends to increase and decline in value by margins that are not comparable to the stock market, it is impractical to rely on the same tax policies.

Even major projects are shutting down

On Dec. 13, Basis — a stablecoin project financed by some of the largest venture capital firms in the world, such as Andreessen Horowitz and Bain Capital Ventures — announced that it will shut down its operations and return the $133 million it raised to its investors.

Dissimilar to other widely adopted stablecoins like Circle’s USDC and Gemini’s GUSD, Basis incorporates an algorithm and alters the supply of the token to adjust to the price of other major crypto assets, like Bitcoin and Ethereum.

In an official statement, the Basis team said that, ultimately, the closure of the project came down to the securities law of the U.S.

“As regulatory guidance started to trickle out over time, our lawyers came to a consensus that there would be no way to avoid securities status for bond and share tokens (though Basis would likely be free of this characterization). Due to their status as unregistered securities, bond and share tokens would be subject to transfer restrictions, with Intangible Labs responsible for limiting token ownership to accredited investors in the US for the first year after issuance and for performing eligibility checks on international users.”

Based on the statement of Basis, it is likely that the SEC and the lawyers of the project deemed it was not sufficiently decentralized, as the development is led by a team of developers hired by the company.

Basis was considered a promising algorithm-based stablecoin project. But, inefficient regulatory frameworks and securities policies that consider crypto assets in the same way as stocks and traditional assets limited the scope of the project.

For the long-term growth of the cryptocurrency sector, the bipartisan bill is crucial in defining cryptocurrencies in a new manner to facilitate the development of blockchain technology and encourage innovation in the space. Jake Chervinsky, a government enforcement defense and securities litigation attorney at Kobre & Kim, said:

“The Token Taxonomy Act would provide exactly the type of regulatory clarity the crypto industry needs. Legislation like this is orders of magnitude more important than non-binding guidance from agencies like the SEC.”

While the time frame of the approval of the bipartisan bill is uncertain, industry leaders and experts remain generally optimistic in the first initiative led by the members of Congress to regulate cryptocurrencies efficiently.

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‘You Will Be Kicked Out’ – China Officially Bans Security Token Offerings (STO)

The People’s Bank of China (PBoC), the country’s central bank, has officially banned security token offerings (STO) in a continuation of its restrictive legislation governing digital currencies. 


China: STO is ‘Illegal Financial Activity’

In continuation of its crackdown on digital currencies, China’s central bank has officially halted security token offerings, South China Morning Post reports.

Speaking at an internet finance forum in Beijing, Pang Gongsheng, deputy governor at PBoC, said:

The STO business that has surfaced recently is still essentially an illegal financial activity in China. […] Virtual money has become an accomplice to all kinds of illegal and criminal activities.

In addition to this formal acknowledgment of the ban on both initial coin offerings and STOs, the deputy governor also outlined that the majority of the financing operations, which were conducted virtual money in China, are suspected of being pyramid sales schemes, illegal fundraising operations, and other types of financial fraud.

Furthermore, Gongsheng also said that the country’s financial industry, in general, could have been hurt significantly if ICOs weren’t banned back in 2017.

China to Blame?

Beijing Will ‘Kick You Out’

The chief of Beijing’s Bureau of Financial Work, Huo Xuewen, has also reportedly issued a warning against STO promotion, saying:

I want to warn those who are promoting STO fundraising in Beijing. Don’t do it in Beijing. You will be kicked out if you do it.

Despite the country’s severed regulatory stance against digital currencies, Bitcoinist reported that local ICOs use foreign-registered companies to circumvent the prohibitions, while traders use Tether and VPNs to continue trading digital currencies, mainly through over-the-counter (OTC) platforms.

Additionally, in what seems like a significant move forward for DLT, the Internet Court of Hangzhou has recognized evidence based on blockchain technology as suitable for use in legal proceedings.

What do you think of China’s move to ban security token offerings? Don’t hesitate to let us know in the comments below!


Images courtesy of Shutterstock