Throughout the past years, the crypto industry has grown rapidly. New coins started to emerge and people started investing more money in different cryptocurrencies. So has increased the number of crypto influencers known as “finfluencers” who share their knowledge on different media platforms. Regulators around the world, including Australia which is one of the largest places for crypto lovers, are trying to determine whether this is a freedom of speech or action that requires a more comprehensive approach.
Not an Easy Problem to Tackle
At the first glance, it could seem simple to ignore these influencers, but the hashtags which they use, especially in TikTok, have already gathered more than a billion views, which is a lot. Ben Armstrong, for example, is one of the most notable “finfluencers” on YouTube, with almost 1.5 million subscribers. His videos about which altcoins to buy have over 650,000 views.
According to Armstrong, he is trying to disseminate information and help those who want to get out of a broken system. He wants to help others find financial stability by bringing relevant information and education to people.
Social Media is the Best Platform for Spreading Information
In the era of technology and information where everything is strongly connected with each other via the Internet, social media is the best platform to disseminate information and provide people with a valuable piece of knowledge. By making short videos (usually 30-second videos) people are more likely to acquire new information and one of the experts describes this as a “walled garden of financial institutions.” Trent Barnes who is the principal of ZeroCap noted that imposing restrictions will only backfire financially disenfranchised society.
As Barnes notes, regulators should have a positive impact but instead, they are locking people and discouraging them from getting into crypto-related activities. At the same time, they move to Wall Street but they do not have enough experience, knowledge, or resources to conduct necessary activities.
Dishonest Influencers are Rampant
The coin has another side too. While some influencers might spread information about cryptocurrencies honestly, there are the ones who are involved in scam activities. According to the statistics published by Chainalysis, over $8 billion has been lost in cryptos, $3 billion of which comes to rug pulls. This is a special type of scam, where developers create hype around cryptocurrencies, which leads to the sharp rise in crypto, and after that, they disappear. Crypto owners are left with nothing and a lot of dishonest influencers try to promote such activities.
For example, the latest rug pull happened around the explosive TV show “Squid Game”. The developers of the token abandoned the project and the price of the token fell to zero. Initially, the enormous hype on Twitter saw the token’s price skyrocketing, but then everything returned to the previous level.
ASIC Issues Warning
The Australian Securities and Investments Commission noted that any party who provides financial advice basically breaches the Corporations Act 2001 and any people involved will face significant fines and penalties.
According to Urszula McCormack, who is a financial regulatory lawyer at King & Wood Mallesons, people who provide advice need to be aware of the penalties they might face.
Andrew Bragg, the Senator in Australia, also expressed his discontent and noted that more needs to be done with social platforms and regulations. What is the best way to regulate unlicensed financial services is still unknown, but the subject of “finfluencers” is something that can be both advantageous and detrimental to people.