Aussie crypto 'finfluencers' face tough new legal restrictions
|The Australian securities regulator is taking a stand against financial influencers whom they believe to be bamboozling the general public with misinformation about crypto.
New warnings from the Australian Securities and Investments Commission (ASIC) on appropriate conduct for financial influencers could have a dramatic impact on the local crypto industry.
ASIC’s recent Information Sheet outlines the traps influencers and the companies that hire them could fall into while wittingly or unwittingly promoting financial products. The penalties for failing to heed ASIC’s warnings could lead to millions of dollars in fines for corporations 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 investing services are seen as financial products. To those financial influencers or ‘finfluencers’ who are not sure whether their brand is in violation of the law, ASIC writes “Think about your content carefully and whether you are providing unlicensed financial services.”
One point of confusion in the new rules concerns exactly what constitutes promotion as opposed to innocuous informing of financial products. Financial blogger from Strong Money Dave Gow wrote on March 29 that “Writing almost anything could influence someone to invest or use any 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 in which influencers may 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 could breach the law by providing unlicensed financial product advice.
Australian Liberal Senator Andrew Bragg believes there is an incongruence between the new ASIC guidelines and how crypto is regulated in his country. He believes that under current laws, the crypto industry should be exempted 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 introduced an ambitious new proposal concerning decentralized autonomous organizations (DAO) at Australia Blockchain Week last month.
As someone who may now be considered an unlicensed finfluencer, Gow takes exception to restrictions on what they now may not do, which is make any sort of recommendation. He added that the rule limits influencers to simply “parroting what you can read elsewhere” and harms the investor knowledge base. He stated, "How does that help you wade through the sea of information and nonsense out there?”
Modify old content / minimise investing discussion / not mention any financial products, funds etc.
— Dave Gow | Strong Money Australia (@strongmoneyaus) April 2, 2022
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.
As part of Australia’s Corporations Act, individual influencers must beware of how they promote financial products, while corporations must also keep a close watch on their hired influencers to ensure no rules are broken. The commission offers several case studies that provide context that could help identify whether an individual or company is promoting financial services.
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