UK Watchdog Takes Aim at Social Media Crypto Promotions Including Memes
To tackle the rise of misleading financial and crypto promotions on social media platforms, the UK Financial Conduct Authority (FCA) has proposed new guidance. In its latest circular, FCA has targeted the use of memes in the crypto sector.
The agency noted, “We have seen memes and other similar communications circulated on social media with users often not realizing they are subject to our rules.”
FCA Guidance on Social Media Crypto Promotions
FCA has noted the growing popularity of cryptocurrencies and investment products being marketed online. Therefore, the proposal aims to modernize existing guidelines for financial promotions. The social media rules are aimed at platforms like YouTube, Instagram, Threads, Discord, and Twitter.
The agency said,
“We have also seen a substantial increase in financial influencers, also known as ‘finfluencers,’ on social media promoting financial products, particularly investment and credit products.”
As part of their initiative, the regulator will specifically address the use of memes, which have become prevalent in promoting crypto assets. The FCA seeks to include these seemingly lighthearted communications under its financial promotion regime.
Take a look at how web3 marketing works in the sector: What Is Web3 Marketing? Definition, Guide, and History
The FCA highlighted that these promotions specifically target younger consumers. Therefore, the guidance includes “ensuring that customers get the right information
at the right time, and in a way they can understand to help them make effective decisions.”
The FCA emphasizes that promoting regulated financial products without approval from an authorized person or providing financial advice without proper authorization may constitute a criminal offense.
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Lucy Castledine, Director of Consumer Investments at the FCA, expressed concerns about the number of ads falling short of existing guidance to protect consumers. The Director warned, “And for those touting products illegally, we will be taking action against you.”
Previously, the FCA collaborated with the Advertising Standards Authority (ASA) to educate consumers and influencers about the potential risks. Now, consumer groups, trade bodies, influencers, social media platforms, and oversea businesses extending into the UK will have to take note of the guidance.
In light of the increasing notoriety of ‘finfluencers,’ the FCA has been actively engaging with major technology companies. These collaborations have helped to implement stricter advertising policies by allowing FCA-authorised firms.
The note specified,
“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 new notification aligns with other regulatory updates. FCA’s earlier proposal in June classified crypto assets as ‘Restricted Mass Market Investments’, subjecting them to more stringent regulatory requirements.
Meanwhile, crypto firms marketing to UK consumers must adhere to the watchdog guidelines by Oct. 8, 2023. This includes banning incentives to invest in cryptocurrencies, implementing clear risk warnings, and introducing a 24-hour cooling period.
While that happens, a centrally-backed digital currency has led to concerns in the country.
Recently, a survey of 50,000 UK citizens revealed worries about surveillance and the potential for financial instability by a CBDC.
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