UK to target “illegal” crypto promotions, including memes
- The FCA asked for crypto promotions to be compliant with advertising laws in the country.
- The regulator considers crypto to be a high-risk investment.
The United Kingdom’s financial regulator was all set to bring crypto promotions within the ambit of advertising laws in the country.
The Financial Conduct Authority (FCA), the UK financial regulator, issued a proposed guidance on social media financial promotions on 17 July. The guidance focused on promotional memes and financial influencers.
As per the proposed guidelines, memes seen as promoting crypto assets may need to add disclaimers in order to comply with advertising regulations.
Regarding promotions in the crypto industry, the FCA stated that it has seen memes from crypto firms. Many are not aware that these memes are subject to its promotional rules. Promotional memes are quite popular in the crypto sector, it noted, and added that any type of communication could be deemed a financial promotion.
The FCA considers crypto to be a high-risk investment. Firms can advertise crypto assets to retail investors at large. But they need to include risk warnings. It also suggested a ban on investment incentives.
Finfluencers promoting crypto without approval to face action
The FCA warned financial influencers or “finfluencers” that crypto promotions or financial advice, without the approval of the FCA, could be an offense punishable by up to two years in jail, an unlimited fine or both. The law applies even to promotions from outside the UK that may affect people in the country.
Beginning 8 October, the FCA will prohibit incentives to invest in crypto, such as ‘refer a friend’ bonuses. Crypto exchanges must also add clear risk warnings. They should also add a 24-hour cooling period to allow first-time investors the time to review their investment decision. These measures are similar to the ones in place for other risky investments.
The proposal mentions,
In Q4 of 2022, 69% of financial promotions communicated or approved by authorised firms which were amended or withdrawn following our intervention involved website or social media promotions.
The proposed guidance is open for public comments until 11 September.