The UK FCA may soon make crypto boring.

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The Financial Conduct Authority (FCA) in England has identified a new area of ​​regulatory risk: cryptocurrency memes. The financial regulator has warned that non-compliant crypto memes not only breach financial promotion regulations but can also lead to criminal offences.

Too many people in the UK are being offered money from inappropriate sources.

We will speed up our work to avoid illegal money promotions, especially those that appear on social media. #money promotions #money service

— Financial Conduct Authority (@TheFCA) July 17, 2023

In a new set of guidelines presented on July 17, the FCA cited Mem, comparing the struggles of traditional cash withdrawals to the ease of cryptocurrency transactions. The agency sees misleading implications in such memes, noting that all forms of communication may fall under financial promotion laws, specifically section 21 of the Financial Services and Markets Act 2000:

“The use of memes in promotions is particularly prevalent in the cryptoasset sector. Figure 7 is an example of a cryptoasset meme subject to the financial promotion regime.

The law lists criminal penalties for trespassing, including a maximum of two years in prison, unlimited fines, or both. Importantly, “financial promotions that are channeled outside the UK, but are likely to have an effect in the UK, are within the regime.

These guidelines, published on July 5, give crypto advertisers until October 8, 2023 to change their message or get regulatory approval.

Memecoin initiatives that rely heavily on memes for promotion may be affected. They may need to include disclaimers in their notices to comply with advertising regulations.

Another target of the new FCA guidelines are social media “finflueners”, or individuals who advertise financial products, particularly investment and loan products, on social media platforms.

The FCA has explained that finfluners, particularly those operating on platforms such as Reddit and Telegram, can breach the limits on financial promotion, regardless of whether there is direct compensation or a clear commercial interest:

We want unauthorized influencers to think carefully before promoting financial products or services and understand their obligations when promoting them on their social media channels. It can be a criminal offense to promote a regulated financial product or service without an FCA authority or to give financial advice without an FCA licence.

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