Islamabad, November 21, 2023 – Pakistan has taken a decisive step in controlling the rise of surrogate advertisements related to cryptocurrency exchanges and betting platforms by imposing a ban on their promotion.
The Securities and Exchange Commission of Pakistan (SEC Pakistan) issued a notification on Tuesday, directing all companies, including limited liability partnerships (LLPs), to refrain from engaging in any form of advertisement or sponsorship agreements with entities involved in surrogate advertising.
Surrogate advertising involves the promotion of prohibited products, digital coins, and betting platforms by positioning them as substitute goods, often through indirect means such as sponsoring sports events. This practice aims to embed the brand in consumers’ minds while avoiding direct promotion of the banned items. The SEC Pakistan took notice of the growing trend of surrogate advertisements on certain internet-based cryptocurrency exchanges and betting platforms.
The notification, issued under Section 40B of the SECP Act, not only prohibited future agreements but also urged all companies and LLPs to promptly terminate any existing contracts with entities engaged in surrogate advertising. The directive emphasized strict compliance with the ban in both letter and spirit.
It has come to the attention of regulatory authorities that various online platforms, disguised as sports blogs and news websites, are actively promoting illegal digital coins, online betting, and cryptocurrency investments. These platforms often present themselves under the guise of legitimate sports-related content, leading to concerns over potential fraudulent schemes.
In addition to the ban, the SEC Pakistan issued a cautionary advisory to the general public, urging extreme caution when considering investments in internet platforms and mobile apps related to cryptocurrencies. The advisory emphasized that none of the individuals, companies, or entities advertising cryptocurrencies in Pakistan have received recognition or authorization from the SECP or other regulatory bodies. Consequently, investments promoted by these entities carry inherent risks and may be part of fraudulent schemes.
This move by the SEC Pakistan aligns with global efforts to regulate and monitor the rapidly evolving cryptocurrency landscape. Governments and regulatory bodies worldwide are grappling with the challenges posed by the decentralized nature of cryptocurrencies and the potential for misuse, including fraudulent activities, money laundering, and terrorist financing.
As Pakistan takes steps to safeguard investors and maintain financial integrity, the ban on cryptocurrency advertisements reflects a proactive approach to address the risks associated with the unregulated digital asset space. The regulatory measures are expected to contribute to consumer protection and financial stability in the evolving landscape of digital finance.