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Crypto Memes are Financial Promotions, Says FCA in Shill Crackdown

Last Updated March 28, 2024 1:04 PM
James Morales
Last Updated March 28, 2024 1:04 PM
By James Morales
Verified by Peter Henn

Key Takeaways

  • The UK’s Financial Conduct Authority (FCA) has issued new guidance for social media influencers that promote crypto investments.
  • Any financial promotion is subject to the FCA’s rules, even memes, the regulator stressed.
  • Because crypto assets are a risky investment, they must clearly display risk warnings.

The UK’s financial regulator has warned influencers that promoting investment opportunities without approval could be a criminal offense.

Issuing new guidance “for memes, reels and gaming streams” on Tuesday, March 26, the Financial Conduct Authority (FCA) said it has ramped up scrutiny of financial promotions on social media.

Memes Subject to Financial Promotion Rules

The latest guidance clarifies the FCA’s position on non-traditional advertisements and marketing strategies.

Whether distributed by companies or influencers, the regulator insisted any promotion of a financial product must be authorized by an FCA-approved advertiser.

It said: “Any type of communication is capable of being a financial promotion and subject to the financial promotion restriction. “We’ve seen memes and other similar communications circulated on social media with users often not realizing they may be subject to our rules.”

FCA, crypto memes, financial promotions
Source: the Financial Conduct authority.

The new guidance claimed the use of memes in promotions was “particularly prevalent in the crypto asset sector”.

Crypto Subject to Financial Promotions Rules

Although the FCA highlighted crypto promotions in the new guidance, digital assets were only first included within the scope of UK financial advertising rules last year.

On the day the new rules came into force, the regulator issued 146 alerts concerning non-compliant promotions from some of the biggest names in crypto.

According to the FCA’s rules for cryptocurrency promotions, risk warnings must appear prominently on all communications.

To help ensure this, the regulator’s latest guidance describes how warnings should appear on Instagram stories, TikTok videos and live streams.  

FCA Regime Covers Global Influencers

The territorial scope of the FCA’s financial promotion regime is deliberately broad. Therefore, the FCA has offered advice for social media influencers based overseas to ensure they stay compliant.

For example, it said they could:

  • Geo-block promotions so that UK consumers would not be able to access them.
  • Implement controls to prevent those in the UK from engaging in the investment activity.
  • Adjust any communications that might be seen in the country so that they don’t solicit investment.

While many crypto firms have traditionally embraced influencer marketing as a way to reach the right audience, the FCA has now questioned  whether it is always appropriate:

“Social media will not always be the best place to promote complex products. Firms need to consider whether a platform that offers limited characters or space is the right place to do so.”

Meanwhile, Lucy Castledine, the regulator’s Director of Consumer Investments, cautioned that “promotions aren’t just about the likes, they’re about the law.” No matter the medium, “we will take action against those touting financial products illegally,” she insisted.

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