The UK’s FCA has published further guidance suggesting that non-compliant cryptocurrency memes and unauthorized “financial influencers” could be subject to criminal offenses.
The UK Financial Conduct Authority (FCA) has identified a new area of potential regulatory issues: cryptocurrency memes. The financial regulator has warned that non-compliant crypto memes may not only violate financial promotion rules, but may also result in criminal offenses.
In a new set of guidelines proposed on July 17, the FCA cited a meme that contrasts the difficulty of spending traditional currencies with the ease of cryptocurrency trading. The agency believes that such memes can have a misleading effect, reminding businesses that all forms of communication may be subject to financial promotion rules, specifically Section 21 of the Financial Services and Markets Act 2000:
“The use of memes in promotions is particularly prevalent in the cryptoasset space. Figure 7 is an example of cryptoasset memes that are subject to the financial promotion regime.”
The bill outlines criminal penalties for violations, including up to two years' imprisonment, an unlimited fine, or both. Importantly, "financial promotions that are communicated from outside the UK but are capable of having an effect in the UK fall within the scope of the regime."
The guidelines, published on July 5, state that those promoting cryptocurrencies will need to change their information or obtain regulatory approval by October 8, 2023.
Memecoin projects, which rely heavily on memes for promotion, could be affected. In order to comply with advertising regulations, they may have to include disclaimers in their memes.
Another target of the new FCA guidance is social media “financial influencers” – individuals who promote financial products (particularly investment and credit products) via social media platforms.
The FCA clarified that financial influencers, particularly those operating on platforms such as Reddit and Telegram, may breach financial promotion restrictions regardless of whether direct compensation or clear commercial interests are involved:
"We expect unauthorised influencers to think carefully before promoting financial products or services and to understand their obligations when advertising through social media channels. It may be a criminal offence to promote regulated financial products or services without the approval of an FCA authorised person, or to provide financial advice without FCA authorisation."