The UK’s Financial Conduct Authority (FCA) has warned that crypto memes may be considered financial promotions and subject to regulatory scrutiny. The charges could lead up to 2 years in jail based on the given proposal.
In a recent statement, the FCA said that memes and other forms of social media content can
“have the effect of encouraging investment or conveying investment advice”
and therefore may fall under the remit of financial promotion rules.
The regulator’s comments come amid a surge in interest in cryptocurrencies like Bitcoin and Dogecoin, which have seen their values skyrocket in recent months.
As social media platforms become increasingly popular as a means of promoting investments, the FCA has urged investors to exercise caution and seek professional advice before making any financial decisions.
Targeting promotional memes and financial influencers, the Financial Conduct Authority (FCA) published a proposed guidance on social media financial promotions on July 17.
The social media environment has changed, and new websites like Instagram Threads and YouTube streamers have emerged as important sources of revenue advertisements.
The regulator noted that earlier recommendations focused on character-restricted media like Twitter.
According to the FCA, customers who use social media to research financial decisions are likely to come across promotions that are unjust, murky, or deceptive and hence likely to do them harm.
Peer-to-Peer Industry Responds Swiftly to Regulatory Scrutiny of Risky Investments:
The watchdog is restricting incentives to invest in cryptocurrencies, such as “refer a friend” bonuses, as of October 8 and requiring businesses to include clear risk warnings on advertisements.
Additionally, financial services companies will be required to make their social media advertisements more transparent and fair for customers under the new consumer responsibility regulations, which go into effect at the end of this month.