CONSOB and ESMA Unite: Crypto Finfluencers Under Scrutiny
Italy‘s financial watchdog, CONSOB, is sending a clear message to the world of crypto-focused “finfluencers.” Following the European Securities and Markets Authority (ESMA), CONSOB is now amplifying warnings to social media promoters, reminding them that EU regulations concerning investment recommendations and advertising fully apply to the cryptocurrency space. This move signals a tightening of the regulatory grip on how crypto is promoted online, with a particular focus on content that promises quick riches.
The Risks of Unregulated Promotion
The core of the issue revolves around the potential for misleading and non-compliant content. ESMA‘s factsheet emphasizes that promoting financial products or services isn’t the same as promoting consumer goods. Highlighting the dangers, the authorities specifically mention contracts for difference (CFDs), forex, futures, certain crowdfunding products, and, crucially, volatile cryptocurrencies. These instruments can lead to investors losing their entire capital. Finfluencers, even if not financial professionals, bear legal responsibility for the content they publish.
Advertising Transparency and Regulatory Obligations
A key focus is on advertising transparency. Paid partnerships and promotions must be clearly labeled as such. Generic disclaimers, such as “this is not financial advice,” do not absolve influencers of their regulatory obligations. Furthermore, offering personalized investment advice without the proper licensing may be considered regulated investment advice, leading to potential legal repercussions.
A Broader European Trend
CONSOB‘s notice falls within a broader European effort to curb misleading practices by finfluencers. ESMA has been addressing investment recommendations on social media since 2021, and breaches can result in substantial administrative fines, reaching up to 5 million euros for individuals, with even higher penalties for companies. Some EU member states are even considering criminal prosecution for market abuse offenses.
International Examples of Regulatory Action
Other countries have already implemented tailored approaches. For example, France’s Autorité des marchés financiers, alongside the advertising authority ARPP, launched a “Responsible Influence Certificate” for influencers working on financial promotions. The UK’s Financial Conduct Authority finalized its social media financial promotions guidance in 2024. They’ve even partnered with celebrities to raise awareness, a stark reminder that unauthorized or non-compliant crypto promotions could lead to serious legal consequences.
The SEC’s Pursuit of Misleading Tactics
This crackdown reflects a broader global reaction against celebrity-led hype around risky investment products. The U.S. Securities and Exchange Commission (SEC) has actively pursued cases. The SEC fined Kim Kardashian $1.26 million for promoting EthereumMax tokens without proper disclosure, and a class-action lawsuit targeted “FTX influencers,” alleging they misled followers with promotions linked to the collapsed exchange.
Conclusion: Navigating the New Crypto Landscape
The message is clear: the unregulated Wild West days of crypto promotion are ending. Finfluencers and investors alike must adapt to a landscape where transparency, compliance, and responsible behavior are paramount. Those who fail to comply with regulations face significant financial and legal risks. The evolving regulatory environment demands a careful and informed approach to navigating the cryptocurrency market.
