UK FCA Proposes Crypto Parody Disclaimer Rules

According to new proposed guidance from the United Kingdom’s financial regulator, crypto firms and influencers may need to begin affixing disclaimers to crypto parodies to remain compliant with advertising laws.

The Financial Conduct Authority (FCA) issued a proposed guidance on social media financial promotions on July 17, targeting promotional memes.

The Financial Conduct Authority (FCA) issued a proposed guidance on social media financial promotions on July 17, targeting promotional memes and financial influencers. The FCA stated that it has observed crypto firm images circulating online that many do not realize violate its promotional rules.

According to the report, promotional memes are especially prevalent in the cryptocurrency industry, and any form of communication can be considered a financial promotion. The FCA views cryptocurrency as a high-risk investment.

It can be advertised to retail investors, but there are restrictions, such as a prohibition on investment incentives and the inclusion of risk warnings.

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

According to the report, 69% of financial promotions on websites or social media from authorized firms were modified or withdrawn in the fourth quarter of 2022 as a result of FCA intervention.

It launched the consultation to update its 2015 guidance and clarify how marketers are expected to implement its regulations regarding promotions.

The FCA reported a rise in the number of finance-focused influencers promoting financial products they know little about and that are typically marketed to a younger demographic.

It cautioned influencers that their promotions could constitute a crime punishable by up to two years in prison, an unlimited fine, or both.

The law applies to foreign promotions that could have an impact on the United Kingdom. It cited a report claiming that over 60 percent of 18- to 29-year-olds follow social media influencers, with three-quarters claiming to trust their advice.

According to an FCA survey conducted in 2021, 58% of respondents under the age of 40 cited social media and news excitement as the reasons for their investment in a high-risk product.

The comment period for the proposed guidance ends on September 11.