New warnings from the Australian Securities and Investments Commission (ASIC) on the proper conduct of financial influencers could have a dramatic impact on the local cryptocurrency industry.
ASIC’s recent fact sheet outlines the pitfalls that influencers and the companies that hire them could fall into when knowingly or unknowingly promoting financial products. Penalties for not heeding ASIC’s warnings could lead to millions of dollars in fines for companies and up to five years in prison for individuals.
Although it does not specifically mention crypto influencers, the guidelines certainly apply to them, as cryptocurrency investment services are considered financial products.. For those financial influencers or “finfluencers” who are unsure if their brand is breaking the law, ASIC writes “Think about your content carefully and if you are providing financial services without a license.”
One point of confusion in the new rules concerns what exactly constitutes promotional versus innocuous information about financial products. Strong Money financial blogger Dave Gow wrote on March 29 that “writing almost anything can influence someone to invest or use any financial product.”
Gow’s assessment is based on the nebulous distinction that the ASIC has made between the objective facts of a financial product and the way influencers can present them. It states:
“If you present factual information in a way that conveys a recommendation that someone should (or should not) invest in that product or class of products, you may be breaking the law by providing advice on financial products without a license.”
Australian Liberal Senator Andrew Bragg believes that there is an inconsistency between the new ASIC guidelines and the way cryptocurrencies are regulated in his country. He believes that under current laws, the crypto industry should be exempt from these new restrictions.. He told Cointelegraph in an email:
“ASIC’s current policy applies the law to cryptocurrencies to the extent that digital assets fall under the definition of a financial product. Cryptocurrencies are currently unregulated and not a financial product… I think we can do more.”
Senator Bragg is in favor of clearer regulation of cryptocurrenciesand unveiled an ambitious new proposal for decentralized autonomous organizations (DAOs) at Australia Blockchain Week last month.
As someone who can now be considered an unlicensed finfluencer, Gow opposes restrictions on what they can’t now do, which is make any kind of recommendation. He added that the rule limits influencers to simply “parroting what you can read on other sites” and harms the knowledge base of investors. He stated, “How does that help you wade through the sea of information and nonsense that’s out there?”
Modify old content / minimize investing discussion / do not mention any financial products, funds etc.
Some may choose to close up shop, I know one who is, while others will prob continue for enjoyment in a limited capacity.
Sad situation for free speech.
— Dave Gow | Strong Money Australia (@strongmoneyaus) April 2, 2022
Modify old content / minimize discussion of investments / do not mention any financial products, funds, etc. Some may choose to go out of business, I know of one who is, while others will probably continue to enjoy themselves on a limited basis. It is a sad situation for freedom of expression.
As part of Australia’s Companies Act, individual influencers must be careful about how they promote financial products, while companies, for their part, must also keep a close eye on their hired influencers to ensure they are not break the rules The commission offers several case studies that provide context that could help identify whether an individual or business is promoting financial services.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.