New warnings from the Australian Securities and Investments Commission (ASIC) on the proper conduct of financial influencers could have a dramatic impact on the local crypto industry.
ASIC Recent Information Sheet outlines the traps that influencers and the companies that hire them can fall into when consciously or unconsciously promoting financial products. Penalties for not heeding ASIC warnings could result in 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 investment services are considered financial products. For those financial influencers or 'finfluencers' who are unsure if their brand is breaking the law, ASIC writes: "Think about your content carefully and if you are providing financial services without a license."
One point of confusion in the new rules concerns exactly what constitutes promotion rather than innocuous information on financial products. Financial blogger Strong Money's 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 it which influencers can introduce them. It states:
โIf 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 be breaking the law by providing advice on financial products without a license.โ
Australian Liberal Senator Andrew Bragg believes there is an inconsistency between the new ASIC guidelines and the way cryptocurrencies are regulated in his country. He believes that under current laws, the crypto industry should be exempt from these new restrictions. He told Cointelegraph in an email:
โASIC's current policy applies the law to cryptocurrencies to the extent that digital assets fall within the definition of a financial product. Cryptocurrencies are currently unregulated and not a financial productโฆ I think we can do more.โ
Senator Bragg is a proponent of clearer crypto regulations, and recently presented a new and ambitious proposal in relation to decentralized autonomous organizations (DAOs) at Australian Blockchain Week last month.
As someone who can now be considered an unlicensed influencer, Gow opposes restrictions on what they can't now do, which is make any kind of recommendation. He added that the rule limits influencers to simply "reproducing what you can read elsewhere" and damages investors' knowledge base. He said, "How does that help you cut through the sea of โโinformation and nonsense out there?"
Modify old content / minimize discussion of investments / do not mention any financial products, funds, etc.
Some may choose to close shop - I know one who is - while others will likely continue to enjoy in a limited capacity.
Sad situation for freedom of expression.
โ Dave 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 Companies Act, individual influencers must be careful about how they promote financial products, while corporations must also keep a close eye on their hired influencers to ensure rules are not broken. The commission offers several case studies that provide context that could help identify whether an individual or business is promoting financial services.
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