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Highlights
- Recently, Kim Kardashian West was criticised for promoting cryptocurrency trading on her Instagram story.
- UK's Financial Conduct Authority is apparently miffed by such promotions by high-profile influencers which has a vast reach.
Cryptocurrencies have been a rage of late with the more and more celebrities exploring the market. Celebrities such as DJ Khaled, Paris Hilton, Floyd Mayweather etc. have all been venturing into the crypto verse either in the form of promotion of crypto coins or through the non-fungible tokens to interact with fans in a more tangible manner.
Kardashian is one of the biggest names to have entered the cryptocurrency world till date. In June, the celebrity had posted on her Instagram story asking her followers if they were into cryptocurrencies. Kardashian had posted: ‘Are you guys into crypto???”
Adding a hashtag #AD, Kardashian added that it’s not a financial advice but merely stating what she had heard from her friends about Ethereum Max token. Experts believe that the celebrity was paid a hefty promotion fee for the stunt. In fact, a 2019 court filing, it was revealed that the celebrity earns up to £361,000 for a single Instagram post.
FCA watch
Kardashian’s promotion hasn’t gone down well with the UK watchdog Financial Conduct Authority (FCA). In fact, it has cautioned the investors for not getting into cryptocurrencies blindly without proper research or understanding of the market.
FCA chair Charles Randell, who mentioned Kardashian’s promotion with the single biggest audience reach so far, reminded people that previously millions have lost their savings to mindless investment. Randell was of the view that while Kardashian was in line of the Instagram rules, but there was no need to mention the name of a particular token, thereby indirectly hinting the investors that this one could be a healthy prospect.
Previously in 2018, Mayweather too had promoted something along these lines, wherein the US Securities and Exchange Commission had come down hard on the boxer who was later fined US $615,000 for tweeting about a coin called Centra, which turned out to be a fraud.
The FCA chairman said even though he couldn’t comment on the legitimacy of the coin, but he stressed that promotion of a particular coin can be problematic. In a way, it misleads the investors to get into it the trading without realising its pros and cons.
Crypto regulations in the making?
Kardashian’s Instagram post has in fact again brought back the much-debated issue of crypto regulation. In August, SEC head Gary Gensler had in fact recommended that while trading in cryptocurrencies, it is utmost important to ensure that investor rights are protected. Gensler said that there is not enough investors’ interest protection when it comes to crypto assets.
Randell too emphasised that the regulation process will not be straightforward, and investors might think that legitimising cryptocurrencies means the investment is secure or not volatile.
Conclusion
Randell’s observation about crypto regulation might be correct for now. It is utmost important to regulate the trading to escape fraud and losses. In the meantime, the FCA should be given powers to regulate such misleading promotions which has such wider reach.
