Crypto companies and influencers may soon be required to include disclaimers on crypto memes to comply with advertising laws in the UK, as outlined in proposed guidance from the country’s financial regulator, the Financial Conduct Authority (FCA).
Released on July 17, the FCA’s proposed guidelines specifically target financial promotion through promotional memes and financial influencers, often referred to as “finfluencers”. The FCA expressed concern that many people were not aware that promotional memes fell under its rules.
Promotional memes are very prevalent in the crypto sector, and the FCA emphasizes that any form of communication can be considered financial promotion. Because the FCA views cryptocurrencies as high-risk investments, cryptocurrencies can be advertised to retail investors, but certain conditions must be met, such as including a risk warning and prohibiting investment incentives.
In the fourth quarter of 2022, FCA reported that 69% of financial promotions on websites or social media of legitimate companies have been changed or withdrawn following FCA intervention. To update its guidance from 2015 and clarify its expectations for marketers regarding promotions, FCA began a consultation process.
FCA has particularly highlighted the emergence of financially oriented influencers, known as influencers, who promote financial products without sufficient knowledge. This promotion may be considered an offense punishable by up to two years in prison, an indefinite fine or both, although the promotion originates outside the UK but has domestic impact.
FCA’s reminder came when it cited a report showing that more than 60% of individuals aged 18 to 29 follow social media influencers, with three-quarters stating that they trust their advice. Additionally, FCA’s 2021 survey revealed that 58% of respondents under 40 cited social media hype and news as reasons to invest in crypto, which FCA considers a high-risk product.
The proposed guidelines are open for public comment until September 11, allowing stakeholders to provide input on the regulations and their potential impact.