Crypto Memes Raise Alarm! UK Regulatory Body: Memes Could Be Seen as Investment Promotion

The Financial Conduct Authority (FCA) of the United Kingdom updated its regulations on advertising and marketing practices for financial investment products on social media yesterday, February 17. It stated that content featuring memes that do not clearly disclose derivative risks, use complexity, or exaggerate falsehoods in the form of images, articles, or videos may face penalties such as imprisonment or fines.

Investment Meme Graphics Will Be Gone Forever

The Financial Conduct Authority (FCA) of the UK has released the latest version of the "Social Media Guidance" aimed at restricting illegal and non-compliant financial promotional activities. The FCA also stated that it is consulting and seeking feedback to expand and amend the guidance to reflect the current development in the use of social media and promotion of financial products.

Main content that will be considered illegal includes:

• Unbalanced content that only highlights huge profits
• Failure to indicate the complexity of investment products and risk warnings
• No clear indication of the parts of the product that are protected by law and those that are not
• Investment memes presented in an exaggerated manner

It is worth noting that the spirit of memes, as one of the elements of the cryptocurrency community, may lead to investigations and prosecution by the FCA if memes related to investment or profits are released, with a potential sentence of up to two years in prison and unlimited fines. This law even applies to promotional activities released from outside the UK but may have an impact in the UK.

It is understood that the scope of the guidance covers traditional financial investment products, the cryptocurrency market, and any area involving profit channels with associated risks. Some view this as excessive regulation that stifles creativity and market development.

According to a survey conducted by the FCA in 2021, 58% of respondents under 40 cited hype on social media and news as reasons and decision-making bases for investing in high-risk products.

Lucy Castledine, Director of Consumer Investments at the FCA, stated:

We are finding more and more advertisements that do not comply with the guidance we have set to protect investors, so we are updating our guidance to clarify our position on companies marketing financial products.

She added, "We will also take action against those who are illegally selling products."

FCA Plans to Crack Down on Referral Bonuses

Previously, the FCA planned to ban any promotional measures related to investing in cryptocurrencies starting from October 8, 2023. This includes mechanisms such as referral code rebates and sharing activities for additional bonuses. This move aims to curb the chaotic ecosystem of cryptocurrency Key Opinion Leader (KOL) communities and prevent investors from being exposed to overly biased and interest-driven investment information.

Additionally, promotions will only be allowed by individuals or companies that have applied for and been authorized by the FSA.

Furthermore, companies providing crypto services must introduce clear risk warnings and a 24-hour cooling-off period to allow first-time participants time to consider and plan their investment decisions.

These measures are similar to regulations for relatively high-risk investment products such as stocks or futures, indicating that the FCA expects to view local crypto services as a form of financial investment product compliance.