According to proposed guidance from the Financial Conduct Authority (FCA) in the United Kingdom, crypto firms and influencers may need to add disclaimers to crypto memes to comply with advertising laws. The FCA released the proposed guidance on social media financial promotions, specifically targeting promotional memes and financial influencers known as “finfluencers.”
The FCA expressed concern that many people are not aware that promotional memes from crypto firms are subject to its rules. While promotional memes are particularly prevalent in the crypto sector, the FCA considers any form of communication as a potential financial promotion. Since crypto is deemed a high-risk investment, there are specific requirements for its promotion, such as including risk warnings and prohibiting investment incentives.
In Q4 2022, the FCA reported that 69% of financial promotions on websites or social media by authorized firms were modified or withdrawn following its intervention. As a result, the FCA launched a consultation to update its 2015 guidance and provide clear expectations for marketers regarding the implementation of its regulations on promotions.
The FCA noted an increase in finance-oriented influencers promoting financial products without adequate knowledge, typically targeting a younger audience. The FCA warned that influencers could face penalties, including imprisonment for up to two years, unlimited fines, or both, for their promotions. The regulations apply not only to promotions originating within the UK but also to those from outside the country that could have an impact within it.
The FCA cited a report stating that over 60% of individuals aged 18 to 29 follow social media influencers, with three-quarters trusting their advice. In a 2021 FCA survey, 58% of respondents under 40 years old mentioned social media hype and news as factors influencing their investments in what the watchdog considers a high-risk product.
The proposed guidance is open for public comments until September 11.
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