Countries around the world are still trying to figure out their rules and regulations for cryptocurrencies. While some have taken a hands-off approach, others are beginning to implement strict oversight of digital tokens.
One good example of increasing crypto scrutiny comes from the United Kingdom, where regulators are proposing tightening restrictions on how cryptocurrencies are promoted online, especially on social media.
Here’s what the U.K. is doing to curb crypto promotions and why the U.S. isn’t likely to follow suit.
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How the U.K. is going after crypto memes
The U.K.’s Financial Conduct Authority (FCA) recently announced that a revamp of its social media regulations is coming. The agency says the goal is to combat illegal and non-compliant financial promotions, and it honed in on cryptocurrency memes in its recent guidance.
The regulator said in a recent statement that crypto memes that have been circulated and shared online are subject to the FCA’s rules. The firm gave an example of a seemingly innocuous meme that showed how easy it is to invest in crypto and said that these posts are subject to the FCA’s rules on promoting investments.
Specifically, the FCA wants online financial influencers, sometimes called “finfluencers,” to mention the risks of crypto investing and disclose that they’re receiving compensation for the promotion.
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Even for a meme post, not doing so could come with a fine or land an influencer in jail for up to two years.
Beginning this fall, the FCA will also ban incentives to invest in cryptocurrencies, implement rules for influencers about issuing warnings for risky investments, and enact a 24-hour “cooling” period that gives first-time investors a chance to consider their investment decision before acting on it.
The FCA also noted that even posting cryptocurrency memes on Reddit to hype a specific investment is subject to regulation. When all of these rules are added together, it could effectively eliminate some posting of crypto memes.
The U.S. doesn’t have any plans for a crypto meme ban right now
Right now, the U.S. federal government doesn’t have anything in the works that compares to the level of crypto meme regulations the U.K. is pursuing.
But that doesn’t mean more crypto regulations aren’t on the way. Last year, President Joe Biden signed an executive order saying that the government would look more closely at the benefits and drawbacks of cryptocurrencies.
Among other things, the order directs the Treasury Department and other federal agencies to consider policy recommendations for cryptocurrencies that could be used to protect consumers and mitigate risks to the financial sector.
One way the U.S. federal government is taking steps to control cryptocurrency investment is through the Securities and Exchange Commission (SEC). The SEC oversees rules and regulations for securities (stocks, bonds, etc.) and has moved closer to overseeing cryptocurrency exchanges, where people buy and sell crypto assets.
The SEC has also said that major cryptocurrencies are unregistered securities and has cautioned consumers about investing in them.
There’s likely more oversight ahead
While there hasn’t been much talk of banning crypto memes, cryptocurrency exchanges, crypto companies, and investors will likely see increased U.S. regulation in the coming years.
The recent collapse of the FTX crypto exchange proved to many in the government that strict oversight of digital currencies is needed. Since then, the SEC has also filed charges against other crypto platforms.
The U.S. may not be on the path towards tracking your latest crypto meme posts on Reddit, but it’s undoubtedly making inroads towards broader oversight of the crypto market. This means that investors who own crypto, influencers who promote it, or companies that create digital coins or exchanges should keep a close watch on any new rules.
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