Crypto memes can be seen as financial promotions, UK watchdog says

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According to a new guideline proposed by the country’s financial regulator, crypto firms and influencers may need to start enforcing crypto meme disclaimers to stay compliant with UK advertising laws .

On July 17, the Financial Conduct Authority (FCA) released proposed guidance on financial promotions on social media that targets promotional memes and financial influencers.

The FCA said its memes seen by crypto firms circulating online, which many do not realize, are subject to its promotional rules.

He said promotional memes are particularly prevalent in the crypto industry and added that any type of communication could be considered financial promotion.

Example of a meme related to crypto investing that the FCA considers a financial promotion. Source: FCA

The FCA considers crypto to be a high-risk investment. It can be advertised to retail investors in general, but there are requirements such as including risk warnings and prohibiting investment inducements.

He said that in the fourth quarter of 2022, 69% of financial promotions on authorized companies’ websites or social media were changed or removed as a result of the FCA’s intervention.

It launched the consultation to update its 2015 guidance and clarify its expectations for how marketers should implement its promotions regulations.

Finfluencers in the crosshairs

The FCA said it has seen an increase in the number of finance-focused influencers promoting financial products they know little about and which typically target younger audiences.

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He warned influencers that their promotions could be an offense punishable by two years in prison, an unlimited fine or both. The law even applies to promotions originating outside the UK that could have an effect in the country.

In his reasoning for the recall, he cited a report that said more than 60% of 18-29 year olds follow social media influencers, with three-quarters saying they trust their advice.

A 2021 FCA survey found that 58% of respondents under 40 cited social media hype and news as reasons for investing in what the watchdog considers a high-risk product.

Public comments on the proposed directions are open until September 11.

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