Crypto Memes Could Attract Jail Term Under New FCA Rules

The UK's Financial Conduct Authority (FCA) has expanded its clampdown on misleading crypto promotions to include crypto memes. 

In a proposed guidelines published on Monday, the financial regulator warned crypto businesses to include disclaimers to any crypto meme they post on different social media platforms, including Twitter, Instagram, YouTube, Threads, and Discord.

The regulator pointed out that promotional memes have become a staple in the rapidly growing crypto industry, yet very few people realise that these memes fall under its promotional rules. Therefore, the new guidelines seek to ensure that crypto firms adhere strictly to the FCA's advertising regulations. 

"We have seen memes and other similar communications circulated on social media with users often not realizing they are subject to our rules."

The FCA still considers crypto as a high-risk investment and urges investors to do their due diligence before investing their money or risk losing it all. The regulator revealed that it had amended or withdrawn approximately 69% of financial promotions on websites or social media from authorized firms. 

It further explained that the proposed guidelines are geared toward "ensuring that customers get the right information at the right time, and in a way they can understand to help them make effective decisions."

Social Media Influencers Not Left Out

As part of the initiative, the FCA will also be targeting social media financial influencers who post promotional crypto memes without obtaining the appropriate approval. 

"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," the regulator stated. 

The FCA warned influencers that their unauthorised promotions and financial advice may constitute a criminal offence that is punishable by up to two years in jail, an unlimited fine or both. 

Further, the regulator clarified that its promotion rules apply to both paid and non-paid influencers. Additionally, the rules will apply to influencers outside the UK whose content affects UK citizens. 

According to the regulator, these seemingly lighthearted communications are particularly targeted at young investors, especially as a majority of youths on social media tend to follow advice from these influencers.

The regulator cited a report which revealed that over 60% of 18- to 29-year-olds follow social media influencers, with about 32.5% saying they trust their advice.

These proposed guidelines are part of the FCA's conscious efforts to tackle the increasing number of misleading crypto ads in the U.K.

Last month, the regulator introduced new promotion rules for crypto firms, including a ban on investment incentives, implementing clear risk warnings and observing a 24-hour cooling period between their promotions.