Italy's Regulatory Body Warns Social Media Influencers Over Cryptocurrency Promotions
Italy's CONSOB has issued a warning to financial influencers regarding compliance with EU investment promotion laws applying to cryptocurrencies.
Italy’s securities regulator, CONSOB, is warning social media finance influencers, or “finfluencers,” that European Union regulations on investment recommendations and advertising cover cryptocurrency promotions as well. This notice follows the dissemination of a factsheet from the European Securities and Markets Authority (ESMA) aimed at informing influencers about their regulatory responsibilities.
In the notification released on Monday, CONSOB referenced ESMA’s factsheet, stressing that promoting financial products, including cryptocurrencies and CFDs, carries potential risks, including total loss of capital. The regulatory body highlighted that influencers must legally ensure their posts comply with existing regulations.
The ESMA factsheet underscores that any paid promotions need clear labeling as advertisements. Simply stating “this is not financial advice” does not absolve influencers from their legal duties. Moreover, those offering personalized investment suggestions without proper licensing may be infringing upon securities regulations.
Notice for Finfluencers. Source: ESMA
The CONSOB alert aligns with broader European efforts to regulate finfluencers who mislead consumers about “get rich quick” schemes and risky investments. The competent authorities urge users to scrutinize the authenticity of the influencers they follow to avoid falling victim to scams.
ESMA and National Regulators Heighten Scrutiny
The warning from CONSOB fits into a larger pattern of regulatory tightening across Europe regarding investment advice prevalent on social media since ESMA’s announcement in October 2021, aimed at minimising misleading financial promotions.
The enforceability of these regulations includes significant fines, and non-compliance can lead to severe penalties, including imprisonment in some jurisdictions.
Celebrity and Creator Crackdowns
There is a growing regulatory focus on high-profile influencers engaging in promoting risky investment schemes. For instance, Kim Kardashian faced a fine of $1.26 million for failing to disclose payments for promoting certain cryptocurrencies. Additionally, there are ongoing legal actions against other influencers associated with significant financial misconduct, pushing a trend of greater accountability in the digital finance space.
