Google has announced an update to its financial services advertising policy. From June 2018 there will be a clampdown across Google advertising platforms with regard to the promotion of cryptocurrency, and other high-risk financial instruments such as spread betting and CFD services. The risk to users is that some of these financial services will not only allow you to lose the money that you have invested, it is possible that you could end up with large debts.
With regard to cryptocurrencies, Google will be banning promotional campaigns for initial coin offerings, Bitcoin exchanges, digital wallets used to store such assets, and cryptocurrency trading advice. Furthermore, products and services related to things in that list will also face the possibility of advertising bans/removal.
Google hasn't elaborated on the reasons behind the upcoming ban. However one can see that other financial services which can put your capital in considerable risk are also on Google's hit-list. The following products services will no longer have adverts served by Google:
- Contracts for Difference: Known as CFDs for short, this financial instrument allows a person to make profit on movements of shares up or down. Speculators don't put up the capital to own the shares which CFDs are (typically) based upon and a small amount of money can be used therefore to hold a large position with a lot of risk.
- Rolling spot forex: this is basically a CFD type instrument for Forex markets (betting on currency exchange rates)
- Financial spread betting: an 'investor' will bet on movements in various financial markets. Using the FTSE 100 for an example, you might bet on it rising at £10 per point. Of course if this share index declines you end up losing £10 per point. So it's like gambling on a race but the race never ends.
- Binary options and synonymous products: unlike in spread betting, binary options have a stated goal which will trigger a payoff/loss. With the FTSE 100 again as an example, a person might decide to put a stake on an offered binary option that the index will hit a certain level today. If it does then you win, if not you lose.
Many of the above have something in common - they are leveraged financial instruments, which means that you can lose much more money than you have deposited with the service provider.
In an interview with the BBC, crypto-currency sceptic David Gerard, author of Attack of the 50ft Blockchain, welcomed Google's policy adjustment. He explained that Google was targeting "the kinds of risky investments that verge on gambling." Gerard thinks crypto-currency trading, and some of the above financial instruments are OK for professional investors but Google's ads currently target ordinary people, which is a problem.