The Australian Securities and Investments Commission is pursuing action against financial influencers who they believe are misleading the general public about cryptocurrency.
The Australian Securities and Investments Commission (ASIC) has issued new cautions about appropriate conduct for financial influencers, which could have a significant impact on the local crypto business.
ASIC’s latest Information Sheet details the pitfalls that influencers and the organisations that hire them may fall into while advertising financial products, whether intentionally or unintentionally. Failure to heed ASIC’s warnings could result in fines of millions of dollars for businesses and up to five years in prison for individuals.
Although the guidelines do not directly address crypto influencers, they do apply to them because bitcoin investing services are considered financial products. “Think about your material carefully and whether you are providing unlicensed financial services,” ASIC advises financial influencers or “finfluencers” who are unsure whether their brand is breaking the law.
One area where the new guidelines are unclear is what constitutes marketing as opposed to harmless financial product information. “Writing virtually anything could inspire someone to invest or use any financial product,” financial writer Dave Gow of Strong Money said on March 29.
Gow’s evaluation is based on ASIC’s hazy distinction between objective facts concerning a financial product and how influencers may present those facts. It reads:
“You could break the law by providing unlicensed financial product advice if you give factual information in a way that communicates a suggestion that someone should (or should not) invest in that product or class of products.”
Senator Andrew Bragg of the Australian Liberal Party says there is a disconnect between the new ASIC recommendations and how crypto is regulated in his nation. He feels that the crypto business should be excluded from these new restrictions under present regulations. he said:
“ASIC’s present approach applies the law to crypto to the extent that digital assets are considered financial products.” Cryptocurrency is currently unregulated and does not qualify as a financial product… “I believe there is more we can do.”
Senator Bragg is a proponent of simpler crypto rules, and during Australia Blockchain Week last month, he unveiled an ambitious new proposal involving decentralised autonomous organisations (DAO).
As someone who may now be deemed an unregistered finfluencer, Gow objects to limitations on what they may no longer do, which includes making any kind of recommendation. He went on to say that the restriction restricts influencers to “repeating what you can read elsewhere” and hurts the investor knowledge base. “How does that assist you in navigating the sea of knowledge and rubbish out there?” he said.
Modify old content / minimise investing discussion / 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
Individual influencers must be cautious about how they advertise financial products under Australia’s Corporations Act, while corporations must keep a tight eye on their hired influencers to ensure no restrictions are broken. The commission provides many case studies that provide context for determining whether someone or a company is pushing financial services.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.