How to market in AI and blockchain: Learning from regulation

Written By Partnerships ORCDAO

Hello again everyone, today I have brought together some info on the ever-evolving world of tech. If you’re building an AI or blockchain gaming startup, understanding and adhering to regulatory guidelines is crucial. This blog post delves into several key areas of regulation and provides case studies to illustrate the importance of compliance.


Don’t “deceptively advertise”: what we can learn from Lumosity

Tech marketers must be vigilant about advertising standards. The Federal Trade Commission (FTC) enforces guidelines to prevent deceptive advertising.

Lumosity, for example, faced a $2 million settlement with the FTC over claims that its brain-training games could delay age-related cognitive decline, Alzheimer’s, and ADHD.

These claims were deemed deceptive as they lacked reliable scientific evidence to support them, illustrating the critical need for substantiation in health-related marketing (FTC, 2016).



Learning from crypto’s last ICO bubble

The Securities and Exchange Commission (SEC) has been actively scrutinizing crypto-related projects.

Kik Interactive Inc. faced charges for conducting an illegal $100 million securities offering of digital tokens during its ICO (Initial Coin Offering).

The SEC deemed this offering unlawful as Kik failed to register the token sale, effectively bypassing the mandatory disclosure requirements that protect investors and give them necessary information about investment risks (SEC, 2019).




How to build a token economy lawfully:

PoQ vs. SEC

In a landmark decision on July 25, 2019, the SEC issued a “no-action” letter to Pocketful of Quarters, Inc. (PoQ) for its Ethereum ERC-20 token “Quarters.”

This decision was pivotal as it assured PoQ that the SEC would not pursue enforcement action, recognizing the token’s utility within the gaming ecosystem and its inability to be exchanged for fiat currency.





Lessons from Pocketful of Quarters:

Compliant Token Economies

PoQ’s case offers invaluable lessons for game developers:

  • Utility Over Investment: Focus on the utility of the token within the game rather than its potential as an investment.

  • Controlled Exchange Mechanisms: Implement mechanisms to prevent the token from being traded on secondary markets.

  • Clear Communication: Be transparent about the nature and use of the tokens.

  • Legal Guidance: Engage with legal experts and proactively consult with regulatory bodies.

  • User Protection: Ensure that the token economy doesn’t give unfair advantages and maintains the integrity of the gaming experience.

  • Innovative Compliance: Explore innovative solutions while adhering to regulatory requirements.



Navigating these regulatory landscapes requires a proactive approach. By understanding cases like Lumosity, Kik Interactive, and PoQ, and integrating lessons learned into marketing strategies, tech companies can not only avoid legal pitfalls but also build trust with their audience in this rapidly advancing world.



Sources:

Partnerships ORCDAO
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