Crypto firms and influencers operating in the United Kingdom may soon be required to include disclaimers on crypto-related memes to ensure compliance with advertising laws.
The Financial Conduct Authority (FCA), the country’s financial regulator, recently released proposed guidance on social media financial promotions, specifically targeting promotional memes and financial influencers, also known as “finfluencers.”
The FCA highlighted the presence of promotional memes from crypto firms that many people are unaware are subject to its promotional rules.
While promotional memes are particularly prevalent in the crypto sector, the FCA emphasized that any form of communication could be deemed a financial promotion.
Considering crypto investments as high-risk, the FCA permits their advertisement to retail investors but imposes certain requirements, such as the inclusion of risk warnings and a ban on investment incentives.
According to the FCA, in the fourth quarter of 2022, 69% of financial promotions on websites or social media from authorized firms were either amended or withdrawn following the regulator’s intervention.
To update its existing 2015 guidance and provide clearer expectations for marketers regarding promotions, the FCA initiated this consultation.
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The FCA also expressed concern about the growing number of finance-oriented influencers promoting financial products without sufficient knowledge, particularly targeting younger audiences.
It warned influencers that promoting financial products without adequate expertise could result in legal consequences, including up to two years of imprisonment, an unlimited fine, or both.
The law applies not only to promotions originating outside the UK but also those that may impact the country.
To support its stance, the FCA referred to a report indicating that over 60% of individuals aged 18 to 29 follow social media influencers, with three-quarters expressing trust in their advice.
A 2021 FCA survey revealed that 58% of respondents under 40 cited social media hype and news as reasons for investing in cryptocurrencies, which the regulator deems a high-risk product.
In summary, the FCA’s proposed guidance aims to ensure compliance with advertising laws by requiring disclaimers on crypto memes and warning financial influencers about the legal consequences of promoting financial products without sufficient knowledge.
This move intends to safeguard consumers, especially younger individuals who may be influenced by social media endorsements.
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