The Australian Securities and Investments Commission (ASIC) has introduced strict legal restrictions for financial crypto influencers. The aim of these laws is to protect investors and promote market integrity.
ASIC’s Information Sheet(INFO 269) also discusses the ‘potential threats and conspiracies around promotion of financial products that could put influencers and the companies into deep trouble.
The guidelines provide minimum requirements and important measures for investors in case something goes wrong.
The penalties for flouting ASIC’s restrictions would be ‘millions of dollars’ in fines for organizations and up to five years in prison for individuals.
It is worth noting that in the sheet, crypto influencers aren’t categorically mentioned. However, the laws do apply to them as cryptocurrency investing services are now deemed as financial products.
For financial influencers who are unsure if their brand violates law, ASIC says “Think about your content carefully and whether you are providing unlicensed financial services.”
Even after the introduction of the framework, what remains unclear is what exactly includes promotion and what is ‘harmless’ informing of financial products. As pointed out by Financial blogger Dave Gow who says that writing almost anything could influence someone to invest or even use any financial product.
Citing the fact that crypto is currently unregulated and hence, not a financial product in Australia, Liberal Senator Andrew Bragg believes the crypto industry must be exempted from these new regulations.
The commission lists out several case studies to provide context for helping to identify if an individual or company is promoting financial services.
For instance, someone intending to influence someone’s decision to buy a specific financial product by providing an opinion about that product counts as ‘financial product advice. Same goes for someone offering an opinion that a positive return is guaranteed on a suite of products.
However, simply describing different types of financial products, with no implied suggestion of one being better than another ‘does not count’ as financial product advice. So does, simply sharing tips on saving money and budgeting that doesn’t involve financial products.
Although cryptos still remain unregulated, ASIC has long been keeping an eye over everything crypto. Last year too, the commission was looking for a pile of Bitcoin worth up to $21 million which were reportedly being held on an encrypted device through which the suspect orchestrated a large-scale superannuation fraud.