Aussie crypto ‘finfluencers’ face severe new legal restrictions

New warnings from the Australian Securities and Investments Commission (ASIC) about appropriate behavior for financial influencers could have a dramatic impact on the local crypto industry.

ASIC’s recent information sheet describes the cases of influencers and the companies they can hire to fall into while consciously or unconsciously promoting financial products. The fines for not following ASIC’s warnings could result in millions of dollars in fines for companies and up to five years in prison for individuals.

Although it does not specifically mention crypto-influencers, the guidelines are certainly applicable to them, because crypto-currency investing services are seen as financial products. To those financial influencers or ‘finfluencers’ who are unsure whether their brand is in violation of the law, ASIC writes “Think carefully about your content and whether you provide unlicensed financial services.”

One point of confusion in the new rules is about what exactly promotion is as opposed to innocently informing financial products. Strong Money financial blogger Dave Gow wrote on March 29 that “Writing almost anything can influence someone to invest or use any financial product.”

Gow’s assessment is based on the somewhat nebulous distinction that ASIC has made between objective facts about a financial product and the way in which influencers can present them. It says:

“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 can break the law by giving unlicensed financial product advice.”

Australian Liberal Senator Andrew Bragg believes there is an inconsistency between the new ASIC guidelines and how crypto is 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:

“The current policy of ASIC applies the law to cryptocurrencies insofar as 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-regulation, and recently introduced an ambitious new proposal regarding decentralized autonomous organizations (DAOs) at Australia Blockchain Week last month.

As someone who can now be considered an unlicensed finfluencer, Gow takes exception to restrictions on what they are not allowed to do now, which is a kind of recommendation. He added that the rule limits influencers to simply “parrot what you can read elsewhere” and shakes up the knowledge base of investors. He stated, “How does that help you wade through the sea of ​​information and nonsense?”

Related: SBF opens Aussie Blockchain Week as government says we are ‘open for business’

As part of the Australian Corporations Act, individual influencers must be careful about how they promote financial products, while corporations must also closely monitor their hired influencers to ensure no rules are broken. The commission offers several case studies that provide context that can help identify whether an individual or company promotes financial services.

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