FCA Issues Warning: Crypto Memes Could Violate Financial Promotion Rules
Crypto memes may amount to criminal offenses if they don’t comply with existing financial promotion rules, warned the United Kingdom’s top financial regulator on Monday.
A newly proposed set of guidelines from the Financial Conduct Authority (FCA) highlighted how “any type of communication” can be considered a financial promotion, and subjected to Section 21 of the Financial Services and Markets Act. The rule states that a person cannot, in the course of business, invite or induce others to engage in investment activity.
The ruling, according to the regulator, extends to memes. “ We have seen memes and other similar communications circulated on social media with users often not realizing they are subject to our rules,” wrote the FCA. It added:
“The use of memes in promotions is particularly prevalent in the crypto asset sector.”
As an especially popular asset class with young people, memes are arguably central to how large swaths of the industry – including its community and businesses – relate to each other online.
In fact, major cryptocurrencies have popularized around little but the notoriety of the meme they represent – such as Dogecoin (DOGE), which is currently the 9th largest crypto by market cap.
GM Vikings ☕️
— FLOKI (@RealFlokiInu) July 17, 2023
Hold onto your helmets 'cause the quick-quick phase is sneaking up on you 😏 https://t.co/dEXTdkNlnk pic.twitter.com/9t61RS2Cer
Another Dogecoin-inspired cryptocurrency – Floki (FLOKI) – ran advertisements for its coin on London public transport back 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 go after such ad campaigns.
Non-Compliant Crypto Memes: A Sample
In its report, the FCA provided an example of a non-compliant crypto ad, which encourages viewers to spend their euros on crypto instead of groceries.
“Cryptoasset firms should also be aware that we have published final rules and proposed guidance on how the financial promotion rules apply to them and what they should be considered when communicating financial promotions,” clarified the FCA.
Crypto firms like Coinbase have previously credited U.K. regulators with providing far more legal clarity on how industry firms can comply with the law compared to their U.S. counterparts. Faced with a lawsuit from the Securities and Exchange Commission, Coinbase CEO Brian Armstrong has shown consideration for moving headquarters to the U.K. if it can’t find legal footing at home.
Last month, lawmakers in the country passed the Financial Services and Markets Bill, granting regulators authority to develop a tailored framework for digital assets.
