Crypto firms and influencers may soon be required to include disclaimers on crypto memes to comply with advertising laws in the United Kingdom, as outlined in proposed guidance from the country’s financial regulator, the Financial Conduct Authority (FCA).
Released on July 17, the FCA’s proposed guidance specifically targets financial promotions through promotional memes and financial influencers, often referred to as “finfluencers.” The FCA expressed concerns that many individuals are unaware that promotional memes fall under its regulatory rules.
Promotional memes are particularly prevalent in the crypto sector, and the FCA emphasized that any form of communication could be deemed a financial promotion. As the FCA views crypto as a high-risk investment, it can be advertised to retail investors, but certain requirements must be met, such as including risk warnings and prohibiting investment incentives.
In the fourth quarter of 2022, the FCA reported that 69% of financial promotions on websites or social media from authorized firms were either amended or withdrawn following the FCA’s intervention. To update its guidance from 2015 and clarify its expectations for marketers regarding promotions, the FCA initiated a consultation process.
The FCA specifically highlighted the rise of finance-oriented influencers, known as finfluencers, who promote financial products without adequate knowledge. These promotions can be considered offenses punishable by up to two years in jail, an unlimited fine, or both, even if the promotions originate from outside the UK but have an impact within the country.
The FCA’s reminder comes as it cited a report indicating that over 60% of individuals aged 18 to 29 follow social media influencers, with three-quarters stating that they trust their advice. Furthermore, a 2021 FCA survey revealed that 58% of respondents under 40 years old cited social media hype and news as reasons for investing in crypto, which the FCA considers a high-risk product.
The proposed guidance is open for public comments until September 11, allowing stakeholders to provide input on the regulations and their potential impact.
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