- The FCA’s new guidelines classify social media posts about cryptocurrencies as financial promotions.
- The regulations will hold social media posters liable for their content.
- The FCA’s move is part of a broader effort to protect consumers.
In a time where social media plays a pivotal role in shaping retail investor attitudes, the UK’s Financial Conduct Authority (FCA) has decided to step up. The regulator will go after financial influencers, or “finfluencers,” that promote crypto projects illegally.
The regulator has issued new guidelines that extend the definition of financial promotions to include social media posts about cryptocurrencies, including memes. This move is part of a broader effort to combat illegal and non-compliant financial promotions in the UK.
UK FCA’s Crackdown on Crypto ‘Finfluencers’
On Monday, July 17, FCA announced its plans to update firms’ social media guidance when promoting financial products or services online. The regulator is consulting on extending its guidance to reflect how social media is used to advertise financial services and products. This includes posts about cryptocurrencies, which are now classified as financial promotions.
The new guidelines also ban incentives to invest, such as referral bonuses. Any individual or firm posting about cryptocurrencies on social media could be held liable if their posts are deemed financial promotions. The FCA’s move aims to protect consumers from potentially misleading or harmful financial promotions online.
The FCA’s move is a response to the growing number of ads falling short of the guidance to prevent consumer harm. Lucy Castledine, Director of Consumer Investments at the FCA, warned of swift action against those that would violate the rules.
“We want people to stay on the right side of our rules, so we’re updating our guidance to clarify what we expect of firms when marketing financial products online,” Castledine clarified. “For those touting products illegally, we will be taking action against you,” she warned.
On the Flipside
- Crypto promotion on social media is not just a concern in the UK. On June 8, a European consumer group issued a complaint against social media giants for allegedly facilitating deceptive crypto ads.
- Crypto regulation has been ramping up worldwide since the collapse of the FTX exchange in November 2022.
Why This Matters
For crypto traders, the FCA’s new guidelines underscore the increasing regulatory scrutiny on cryptocurrencies. Traders should be aware of the changing regulatory landscape and the potential implications for their investment decisions.
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