New warnings from the Australian Securities and Investments Commission (ASIC) on appropriate behavior for financial influencers could have a dramatic impact on the local crypto industry.
ASIC’s latest fact sheet describes the traps that influencers and the companies that hire them could fall into while knowingly or unknowingly promoting financial products. Penalties for failing to heed ASIC’s warnings could result in millions of dollars in fines for companies and up to five years in prison for individuals.
While there is no explicit mention of crypto influencers, the guidelines certainly apply to them as cryptocurrency investment services are viewed as financial products. To those financial influencers, or “influencers,” who are unsure whether their brand violates the law, ASIC writes, “Think carefully about your content and whether you are offering unlicensed financial services.”
One point of confusion in the new rules concerns exactly what constitutes advertising versus harmless information about financial products. Strong Money financial blogger Dave Gow wrote on March 29, “Writing almost anything could persuade someone to invest or use a financial product.”
Gow’s assessment is based on the somewhat nebulous distinction ASIC has made between objective facts about a financial product and the way influencers may present them. It says:
“If you present factual information in a manner that conveys a recommendation that someone should (or should not) invest in this product or class of products, you could be breaking the law by providing unlicensed financial product advice.”
Australian Liberal Senator Andrew Bragg believes there is a mismatch between the new ASIC guidelines and how crypto is regulated in his country. He believes that under current legislation, the crypto industry should be exempt from these new restrictions. He told Cointelegraph in an email:
“ASIC’s current policy applies the law to crypto to the extent that digital assets fall within the definition of a financial product. Crypto is currently unregulated and not a financial product… I believe we can do more.”
Senator Bragg is a proponent of clearer crypto regulations and recently unveiled an ambitious new proposal on decentralized autonomous organizations (DAO) at Australia Blockchain Week last month.
As someone who can now be considered an unlicensed influencer, Gow takes offense at restrictions on what they are now not allowed to do, which is any type of recommendation. He added that the rule limits influencers to simply “parroting what you can read elsewhere” and hurts investors’ knowledge base. He said, “How does that help you wade through the sea of information and nonsense out there?”
Change old content / minimize discussion about investments / don’t mention financial products, funds, etc.
Some may choose to close up shop, I know one who does, while others will likely continue on a limited basis for fun.
Sad situation for freedom of expression.
— David Gow | Strong Money Australia (@strongmoneyaus) April 2, 2022
Related: SBF Opens Aussie Blockchain Week as Government Says We’re ‘Open for Business’
As part of Australia’s Corporations Act, individual influencers must be mindful of how they promote financial products, while corporations must also keep a close eye on their hired influencers to ensure no rules are broken. The Commission offers several case studies that provide the context to determine whether an individual or entity is promoting financial services.
https://cointelegraph.com/news/aussie-crypto-finfluencers-face-tough-new-legal-restrictions Australian crypto “influencers” face tough new legal restrictions