Crypto Memes Could Violate Financial Promotion Rules
Crypto memes can constitute criminal offenses if they fail to comply with existing financial promotion rules, the UK’s top financial regulator warned on Monday.
a new proposal set of guidelines of the Financial Conduct Authority (FCA) highlighted how “any type of communication” can be considered a financial promotion and be subject to Section 21 of the Financial Services and Markets Act. The rule establishes that a person may not, in the course of business, invite or induce others to participate in investment activities.
The ruling, according to the regulator, extends to memes. “We have seen memes and other similar communications circulating on social media with users often unaware that they are bound by our rules,” the FCA wrote. Added:
“The use of memes in promotions is particularly prevalent in the crypto asset sector.”
As an especially popular asset class with young peopleMemes are arguably central to how large swaths of the industry, including your community and businesses, engage with one another online.
In fact, the major cryptocurrencies have become popular around little more than the notoriety of the meme they represent, such as Dogecoin (DOGE)which is currently the ninth largest cryptocurrency by market capitalization.
Another Dogecoin-inspired cryptocurrency: Floki (FLOKI) – ran ads for its currency on London public transport in 2021, which were later banned by the Advertising Standards Authority (ASA). However, the FCA had previously warned that it would need new authorities from policymakers before it could independently pursue such ad campaigns.
Non-compliant crypto memes: a sample
In its report, the FCA provided an example of a non-compliant crypto ad that encourages viewers to spend their euros on crypto instead of groceries.
“Crypto asset firms should also be aware that we have published final rules and proposed guidance on how financial promotion rules apply to them and what should be considered when communicating financial promotions,” the FCA clarified.
Cryptocurrency firms like Coinbase have previously credited UK regulators for providing much more legal clarity on how companies in the industry can comply with the law compared to their US counterparts. In the face of a lawsuit from the Securities and Exchange Commission, Coinbase CEO Brian Armstrong has shown consideration to move the headquarters to the UK if you cannot find a legal base at home.
Last month, the country’s legislators approved the Financial Services and Markets Bill, which gives regulators the authority to develop a custom framework for digital assets.