FCA believes that crypto memes play a significant part in crypto promotions.
Crypto companies and influencers may soon be required to include disclaimers on their crypto-related memes to align with the United Kingdom's advertising regulations.
On July 17th, the Financial Conduct Authority (FCA) released draft guidance on social media financial promotions aimed at "finfluencers" and promotional memes.
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The FCA stated that it had identified several memes from crypto firms that fall under promotional rules. In its report, the regulatory authority highlighted the significant value promotional memes have in the crypto industry, emphasizing that any form of communication can be viewed as a financial promotion.
The FCA has noticed an increase in financial influencers promoting financial products, often with little to no knowledge about them, and predominantly targeting a younger audience.
It is worth noting that the FCA classifies cryptocurrency as a high-risk investment. Therefore, while it can be promoted to retail investors, FCA requires firms to include risk warnings.
As a part of its warning rules, FCA aims to introduce new regulations mandating "finfluencers" and crypto firms to add disclaimers when sharing crypto-related memes.
The regulatory body cautioned influencers that promotional offenses could result in penalties, including imprisonment for up to two years, an unlimited fine, or both. This law also applies to promotions outside the UK that could impact the country.
Based on the report, in Q4 2022, the FCA instructed to modify or withdraw 69% of financial promotions by authorized firms on websites or social media.
The FCA is accepting public comments on the proposed guidance until September 11th.
The UK's financial regulator has been actively working on crypto-related promotion regulation for quite some time. In particular, starting October 8th, FCA is banning "refer a friend" bonuses. On top of that, crypto firms are obligated to give new investors a "24-hour cooling period" and introduce clear risk warnings.
