4 - 7 minute read
The UK Financial Conduct Authority (FCA) and the Advertising Standards Authority (ASA) have issued a warning to social media “finfluencers,” insisting that they stop promoting illegal “get-rich-quick” schemes or face law enforcement. The regulators mentioned cryptocurrencies and NFTs in their seven-part checklist to ensure that finfluencers stay within the boundaries of the law.
The checklist urges finfluencers to consider whether they are the “right person” to be promoting the financial product and states that their followers may “lose all their money” from the investment. In addition to conducting “due diligence,” social media influencers should seek the FCA’s approval and ensure that the ad is legal, truthful, and correctly labeled under ASA regulations.
The FCA and ASA encourage influencers to visit ScamSmart to ensure they are not promoting an investment scam. “If in doubt, don’t promote” is the slogan of the checklist.
Unlawfully Promoting Financial Products or Services is Illegal
It is a crime to unlawfully promote financial products or services, with a maximum sentence of two years’ imprisonment and an unlimited fine. Sarah Pritchard, the FCA’s executive director, said that there has been a rise in illegal financial promotions lately. “They are often doing this without knowledge of the rules and without understanding of the harm they could cause their followers,” she said.
UK Love Island star Sharon Gaffka has partnered with the FCA and ASA to emphasize the risks that come with lucrative marketing schemes. The FCA also plans to host an “open roundtable discussion” with influencer agents and the Influencer Marketing Trade Body in the upcoming months.
France May Ban Crypto Influencer Promotions
Across the channel, France proposed banning French social media influencers from promoting cryptocurrencies and NFTs from unlicensed businesses. The National Assembly’s economic committee voted in favor of the amendment proposal on March 23. If passed, the new law would add cryptoassets to a list of prohibited financial products that cannot be promoted by influencers, such as gambling and pharmaceuticals.
Those found to violate the incoming law may be subject to two years’ imprisonment and a fine of 30,000 Euros ($32,300).
Celebrities such as Kim Kardashian, Floyd Mayweather, and Jake Paul have found themselves embroiled in allegations of promoting crypto investment schemes. The range of financial scams includes pump-and-dump schemes, fake currencies, Ponzi, and other pyramidal schemes aiming to trick investors.
Crypto Twitter Hall of Flame:
One of the influencers interviewed, Lark Davis, spoke about the issue and stated that “the relationship between influencers and crypto always had a certain level of tension, and these regulations put the relationship under even more stress.” Davis further noted that the rules should make it easier for consumers to identify fraudulent tweets and scam influencer sites.
The FCA and ASA’s checklist indicates the UK Financial Conduct Authority’s future intentions, suggesting that illegal financial promotions will not be tolerated. The regulators’ partnership with Sharon Gaffka reaffirms the urgency of the issue and highlights the need for social media influencers to adhere to the law.
Advice to Traders
The recent collaboration between the UK Financial Conduct Authority (FCA) and the Advertising Standards Authority (ASA) is a clear sign that the authorities are taking unlawful promotion of financial products and services seriously. Traders should also take this warning seriously and conduct proper research before investing in any cryptocurrency, NFT, or financial scheme.
Moreover, traders should be wary of get-rich-quick schemes that sound too good to be true, as they most likely are. It is important to conduct proper research, gain proper training, and avoid rushing into investments because of the fear of missing out (FOMO). The FCA and ASA remind traders that if in doubt, they should not promote their investment schemes.
The recent warning issued by the UK Financial Conduct Authority (FCA) and the Advertising Standards Authority (ASA) to social media influencers is a clear message to traders and investors to conduct proper research before investing in any cryptocurrency, NFT, or financial scheme. It is important to adhere to the law, avoid fraudulent schemes, and conduct proper due diligence before investing. The collaboration of regulators with influencers like Sharon Gaffka reinforces the urgency of this issue and highlights the need for social media influencers to adhere to the law.