As more businesses and ventures shift their focus to the virtual space, digital assets are gaining more popularity with each passing day, and the number of cryptocurrency users is rising.
Different motives drive the decision by individuals and businesses to venture into the digital ecosystem. Some are for long-term investment, while others, like big brands, use the crypto industry to expand their enterprises by leveraging their customer base, mostly crypto enthusiasts.
Despite the increased participation in the industry, there is still a wide gap in the lack of information regarding how the industry should be operated, considering its high volatility rate and the subsequent loss of funds associated with it.
Many jurisdictions have been enforcing regulations to protect investors and curtail the high risk of cryptocurrency transactions.
Australia has been one of the few countries trying to regulate the industry’s activities with a specific interest in overseeing the role of influencers in the promotion of digital products and services.
The recent regulatory move by the Australian Securities and Investment Commission (ASIC) is geared toward protecting the public against misinformation from influencers in the digital asset space. Hence, the ASIC has made new guidelines targeting influencers.
Accordingly, the new warning is focused on the conduct of crypto industry players that would impact the direction of Australia’s crypto market. The information document from the ASIC revealed some of the regulatory steps put in place to safeguard investors’ funds and penalize influencers or businesses who may consciously or unconsciously promote digital financial products.
According to the record, companies, and entities that fall foul of the law face harsh penalties, which run into millions of dollars and, in some cases, total bans; as for individuals, they are liable to face up to five years in prison.
What Do the ASIC New Laws Say About Crypto Promotion?
The latest guidelines did not specifically mention influencers because of crypto, but it is an indication that cryptocurrency investment is also seen as a financial product.
ASIC also clarified that for those businesses who are not sure if their services are part of the highlighted ones, the commission maintains that they should check if their services fall under the financial services termed “unlicensed.”
However, observers believe that part of the new guidelines is confusing to many regarding what is viewed as promotion in contrast to the product information out by companies on services they provide.
According to Dave Gow, a financial blogger, the act of advertising products can trigger a response from the audience to either invest in or buy a product. The assessment made by Gow is heavily reliant on the interpretation of ASIC and the manner of the approach employed by the influencers.
Nonetheless, the commission still maintains the distinction between promoting and influencing by saying that by presenting accurate information about a product, a recommendation has been made, and the outcome is left to the discretion of the individual who may choose to invest or not.