Influencers Could Face Criminal Charges for Promoting Crypto Without FCA Approval
Violators could face up to two years in prison
The UK’s Financial Conduct Authority (FCA) has issued new guidelines clamping down on influencers promoting financial products who advertise unregulated and unregistered cryptocurrencies.
The guidelines are part of the latest iteration of the financial promotions regime, which came into effect in October 2023. The changes could catch creators out because it applies globally, not just in the U.K., according to Blair Halliday, previous Manager Director U.K. at crypto exchanges Kraken and Gemini.
“It doesn’t matter whether you’re in the country or not, you’re in scope if your services are available, seen or likely to be seen by U.K. customers,” Halliday said. Violators could face up to two years in prison.
Under the FCA’s reclassification, influencers are viewed as an advertising arm of the crypto firm. “You’re effectively acting as a contractor for the business and if they don’t have the correct warnings, you’re going to fall foul of that,” Halliday said. “It’s likely to be a problem for people that are advertising crypto that aren’t based in the UK and don’t know about it.”
The FCA’s intention to make the U.K. a global crypto hub led to the financial promotions regime, which meant crypto was incorporated under a restricted mass market product with promotions approval requirements.
Firms with U.K. customers must have their website and promotions approved, which Halliday says is an onerous task. Failing to do so will result in the FCA blocking a firm’s activities in the U.K.
Under the influence
There is a criminal component for undertaking advertising without the appropriate approval, which Halliday says is part of a move to prevent individuals investing in something they don’t understand. “The FCA views influencers as having access to people who are particularly vulnerable to suggestion, and maybe more so, because they idolize these individuals. You can imagine if Taylor Swift started walking around in a Bitcoin t-shirt, the whole thing would erupt. The Kim Kardashian’s of the world have a responsibility,” he added.
With Goldman Sachs estimating the influencer and creator economy doubling in the next three years, nearing half a trillion dollars, Halliday welcomes the clarity and believes it’ll help make the industry more resilient. The digital assets consultant shared concerns about the legislation remaining an outlier to the rest of the crypto world. It becomes an inhibitor for the U.K. marketplace and the firms considering setting up shop in the jurisdiction, he said.
PayPal, Binance and other large firms in the crypto space have already put notification suspending services to the U.K. However, Halliday remains hopeful.
“I would be surprised if the U.K. is out on an island on this one long-term. It’s going to be interesting to see what happens in the medium-term,” he concluded.