Aussie crypto ‘finfluencers’ face tough new legal restrictions

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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?”

Relat­ed: SBF opens Aussie Blockchain Week as gov’t says we’re ‘open for business’

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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