On Tuesday, the financial regulators in Britain unveiled new rules for crypto promoters. The new rules target individuals and businesses creating memes on crypto and other investment types.
A statement from the Financial Conduct Authority (FCA) revealed that any advertisement or promotion of a financial product captured on a meme must be transparent and fair. The FCA condemned crypto memes that misleads customers to invest in dubious schemes.
FCA Steps Up to Address Financial Crimes
The loss of substantial amounts in the financial sector obliged the FCA to step up and enforce strict rules. With the changes in the financial landscape, the regulators noted that investors were engaging financial influencers (finfluencer)to promote their products to gain competitive advantage.
A finfluencer refers to an individual offering the customers critical information concerning a financial product or service. Based on the growing popularity of financial promoters, the finfluencers will be required to obtain the FCA approval to advertise their meme in UK.
An announcement conveyed by the director of consumer investment at FCA, Lucy Castledine, underlined the need to conform to the promotion rules. The executive confirmed that the FCA will take legal action against the promoters marketing financial products illegally.
FCA Outline News Rules for Finfluencers
Citing the high usage of social media, the executive admitted that these platforms are unsuitable for advertising complicated financial products. She advised businesses to consider whether the social media offering limited character or space was ideal for the advertisement.
The executive confessed that it removed over 10,000 suspicious adverts that misled the customers. The FCA formulated new rules for advertising financial and crypto products in October.
The proposed regulations demand that companies seek to market their products to register with the FCA. The regulators argues that the desire to take full charge of individual finances has empowered millennials to be active in crypto investments.
Rise of Financial Crime
The regulators noted that use of memes in promotion was becoming more common. The FCA stated that crypto memes are more common on platforms where discussions of digital assets are held, such as Telegram and Reddit.
In their report, the FCA observed that memes have been used to hype financial products on Reddit and Telegram. This implies that the new FCA rules will be applicable to social media platforms promoting crypto memes.
The regulators stated that the stringent rules aim to address financial crimes. A review of the FCA report demonstrated that cyber attack incidents increased during the Covid-19 pandemic.
The pandemic preventive measures force most investors and businesses to migrate to online platforms in banking and investment. The changes in the way of doing things during the pandemic forced criminals to advance their skills to steal from consumers.
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