Crypto memes could be considered a financial promotion, says UK watchdog

Crypto companies and influencers may need to start providing disclaimers on crypto memes to stay in compliance with UK advertising laws, according to proposed new guidance from the country’s financial regulator.

On July 17, the Financial Conduct Authority (FCA) released proposed guidelines on social media finance promotion targeting promotional memes and financial influencers — “finfluencers.”

Far too many people across the UK are being shown financial promotions from inappropriate sources.

We will increase our efforts to eradicate illegal financial promotions, particularly those found on social media. #promosifinancial #financial services https://t.co/sK8r5ExxVm

— Financial Conduct Authority (@TheFCA) July 17, 2023

FCA says memes of crypto companies circulating online that many do not realize are subject to its promotion rules.

It says promotional memes are very prevalent in the crypto sector and adding any kind of communication can be considered financial promotion.

Examples of memes related to crypto investments that FCA considers financial promotion. Source: FCA

FCA considers crypto a high-risk investment. These may be widely advertised to retail investors but there are requirements such as including a risk warning and prohibition of investment incentives.

It said in Q4 2022, 69% of financial promotions on websites or social media of legit companies were changed or withdrawn after FCA intervention.

It launched a consultancy to update its guidance from 2015 and clarify its expectations for how marketers apply their rules around promotions.

Finfluencers in the crosshairs

FCA states that there has been an increasing number of financially oriented influencers promoting financial products of which they know little, usually targeting a younger audience.

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It warns influencers their promotion can be an offense punishable by up to two years in prison, an indefinite fine or both. The law applies even to promotions from outside the UK which may impact in that country.

In his reasons for the reminder, he cites a report who claim more than 60% of 18 to 29 year olds follow social media influencers, with three-quarters saying they trust their advice.

FCA 2021 survey found 58% of respondents under 40 cited hype from social media and news as the reason for their investment in products that supervisors consider high-risk products.

Public comments on proposed guidance are open until September 11.

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