Cryptocurrency ads, especially from social media influencers, should be regulated according to the head of the British financial watchdog, who highlighted a recent ad by Kim Kardashian.
Virtual currencies and tokens have sparked the interest of amateur investors who are lured by huge profits, but also risk huge losses and get scammed.
“As we live an increasing part of our lives online, we cannot allow online businesses to operate in ways we would not tolerate with any other company,” said Charles Randell, head of the UK’s Financial Conduct Authority (FCA). , Monday. .
“That includes rules that protect people from investment fraud and scams.”
Kardashian had promoted virtual token Ethereum Max in June in a storyfeed on her Instagram account, which has more than 200 million followers.
Randell stressed that Ethereum Max was not connected to Ethereum, the second most popular cryptocurrency in the world after bitcoin.
“When she was recently paid to ask her 250 million Instagram followers to speculate on crypto tokens by ‘joining the Ethereum Max Community,’ it was perhaps the financial promotion with the largest audience reach in history,” she said. Randell.
He noted that the post was flagged as an ad in accordance with Instagram’s rules.
“But she didn’t have to reveal that Ethereum Max – not to be confused with Ethereum – was a speculative digital token created a month earlier by unknown developers.”
Randell stressed that he did not know if Ethereum Max was a scam.
However, he added, “Social media influencers are routinely paid by scammers to help them pump and dump new tokens based on pure speculation.”
The FCA has repeatedly warned about the risk of crytocurrencies, arguing that investors could potentially lose all their money because the assets are not covered by the UK government’s financial services compensation scheme.