According to a newly recommended filed guidance from the UK’s financial regulator, cryptocurrency influencers and corporations may need to start adding warnings to their crypto memes in order to comply with the country’s advertising regulations.
The Financial Conduct Authority (FCA) published rules on social media financial marketing on July 17 that specifically focus on promotional memes and financial influencers, or “finfluencers.”
The FCA claimed it has observed memes from cryptocurrency companies being shared online, many of which are unaware they are in violation of its promotional rules and regulations.
It noted that any form of communication could be viewed as a financial promotion and claimed that promotional memes are particularly common in the cryptocurrency industry.
The FCA sees cryptocurrency as a high-risk investment. It may be marketed to all retail investors, but certain conditions must be met, such as the removal of investment incentives and the addition of risk warnings.
According to the report, 69% of financial promotions from authorised businesses made on websites or social media in Q4 2022 were changed or removed as a result of FCA involvement.
It started the consultation process to revise its 2015 advice and lay out its expectations for how marketers should implement its promotion-related regulations.
The FCA claimed it has observed a rise in the number of influencers in the financial industry who are advocating financial products they are unfamiliar with and have a large base of younger individuals.
Influencers were forewarned that any violations involving their promotions might result in jail time of up to two years and unlimited fine or both.
Even promotions coming from abroad that might have an impact in the UK are subject to the legislation.
In support of its argument, it mentioned a study claiming that more than 60% of people aged 18 to 29 follow social media influencers and that 75% of them embrace their advise.
According to a 2021 FCA poll study, 58% of the participants under the age of 40 cited news and social media hype as justifications for their investments. The regulation authority believed this result as a high-risk product.
