UK FCA Issues Warning to Meme Coins and Crypto Influencers

The UK Financial Conduct Authority (FCA) has released instructions for businesses and social media influencers in the financial sector to ensure their social media content complies with the law.

The Financial Conduct Authority in the UK has provided recommendations for businesses and creators of memes, videos, and live game broadcasts that advertise financial services.

UK Financial Watchdog Warns Influencers That Could Be Sharing Misleading Advice

The Financial Conduct Authority (FCA) in the UK has issued a caution to individuals who influence financial decisions through social media, referred to as “finfluencers,” against providing false information online concerning meme coins’ investment recommendations.

On Tuesday, the Financial Conduct Authority (FCA) declared that all financial advice provided must be:

Social media now plays a significant role in marketing for businesses, but it’s important to remember that it can also be used to disseminate false information. The Financial Conduct Authority (FCA) advises companies to take responsibility for the promotions they share on social media and urges them to collaborate only with influencers who accurately convey information to avoid contributing to the spread of misinformation or “fake news.”

‘Finfluencers’ Could Face Up to Two Years in Prison

Influencers should be aware that advertising a financial product without first obtaining approval from an authorized representative of the Financial Conduct Authority (FCA) and proper authorization may result in committing a criminal offense.

The Financial Conduct Authority (FCA) warned in its “Final Guidance on Financial Promotions on Social Media” that influencers who fail to adhere to its regulations could be liable for a maximum penalty of two years in prison, an unlimited fine, or both. Previously, the FCA sought feedback on revised social media promotion guidelines through consultation. Subsequently, major tech platforms adjusted their advertising policies to permit financial promotions authorized by FCA-accredited firms.

In partnership with the Advertising Standards Authority, the Financial Conduct Authority (FCA) teaches influencers about the dangers of endorsing financial products. This collaboration arose due to the FCA’s implementation of stricter advertising regulations for high-risk investments, such as cryptoassets.

FCA Cracks Down on Social Media Advertising

The Financial Conduct Authority (FCA) pointed out in its announcement that social media might not be ideal for marketing intricate financial products due to their complexity.

Complex product promotions may not thrive on social media due to character limitations. Companies must assess if such platforms are suitable for their marketing needs. Regulatory scrutiny over financial ads has intensified, leading to the removal of over 10,000 misleading ads last year, an increase from approximately 8,500 in the previous year.

Lucy Castledine, Director of Consumer Investments at the FCA, said:

Marketing for financial products should be honest, transparent, and free from deceit, ensuring consumers have the necessary information to make informed decisions about investing, saving, or obtaining loans.

“Promotions aren’t solely based on gaining likes; they also need to be legal. We won’t tolerate anyone advertising financial products in an unlawful manner.”

In 2023, the Financial Conduct Authority (FCA) strengthened its regulations for cryptocurrency marketing with more stringent industry standards. Starting October 8, 2023, these new marketing policies included a waiting period for crypto purchases and eliminated “refer a friend” incentives. The FCA further prohibited complimentary promotional NFTs (Non-Fungible Tokens) and cryptocurrency airdrops, believing that distributing free NFTs and crypto through airdrops might lead investors to make hasty decisions about investments in crypto, which could potentially cause difficulties for them later.

NFTs and airdrops themselves are not prohibited, but the marketing or promotional activities surrounding them have been restricted.

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2024-03-28 14:02