UK Cracks Down on Crypto Memes and Social Media Influencers
The UK Financial Conduct Authority (FCA) has released finalized guidance that brings social media influencers and crypto memes under the radar of the country’s financial promotion rules.
The move comes as part of the regulator’s efforts to combat the rise in financial scams and misleading advertisements, particularly in the crypto sector.
Key highlights:
- The FCA clarified that any type of communication, including memes and social media posts, can be considered a financial promotion and subject to regulation.
- Influencers operating in the course of business must adhere to the FCA’s rules.
- Crypto firms and promoters are now required to register with the Financial Conduct Authority (FCA).
- The FCA took down over 10,000 misleading financial services advertisements in 2022.
Published on Tuesday by the UK FCA, the guidance underscores the prevalence of memes in crypto industry promotions. Additionally, the FCA noted that it has observed memes and other similar communications circulated on social media, often with users unaware that they may be subject to regulatory oversight.
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The watchdog highlighted that platforms such as Reddit and Telegram, popular among crypto enthusiasts, are not exempt from the rules governing financial promotions.
Under the FCA’s promotion regime, businesses are prohibited from communicating an invitation or inducement to engage in investment activity unless the promotion is communicated by an authorized person or someone with an exemption.
Crypto firms need to register with UK’s FCA
This applies to influencers engaged in business activities, indicating they are either employed or have a vested commercial interest in sharing the communication.
With crypto firms now falling under the FCA’s regulatory scope, they are required to register with the FCA or have their advertisements approved by an authorized entity. Additionally, these firms must include clear risk warnings on their websites and communications and provide first-time buyers with a 24-hour cooling-off period before finalizing purchases.
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Lucy Castledine, director of consumer investments at the FCA, emphasized the importance of compliance, stating, “Promotions aren’t just about the likes, they’re about the law. We will take action against those touting financial products illegally.”
