HOW US LAW IS SHAPING THE LANDSCAPE FOR
CRYPTO INFLUENCERS – LEGAL CHALLENGES THEY FACE
Crypto Influencers have gained enormous popularity in recent year, shaping public opinion on cryptocurrencies and, in many cases, influencing the investment decisions of their followers. However, this growing influence has led to increased regulatory scrutiny in the United States. In this article, we will explore how US law is shaping the landscape for Crypto Influencers and the legal challenges they face.
Crypto Influencers – Legal Challenges in the U.S.
Paid Promotions and Disclosure
- Securities Rule: The Securities and Exchange Commission (SEC) has emphasised that many cryptocurrencies can be considered securities, meaning that paid promotions must comply with securities laws, including full disclosure of any compensation received.
- Misleading advertising: The Federal Trade Commission (FTC) regulates misleading advertising, and Crypto Influencers who make false or exaggerated claims about the performance of cryptocurrencies may face penalties.
Unregistered Investment Advice
- Registrations: Those who provide investment advice, including through social media, generally must register as investment advisers. Crypto Influencers offering specific investment recommendations may fall into this category.
- Conflicts of interest: Influencers must be transparent about any conflicts of interest, such as the cryptocurrencies they own or are investing in.
Capital Gains Taxation
- Tax treatment: Gains made through the promotion of cryptocurrencies or by receiving cryptocurrencies as payment are generally considered capital gains and are subject to taxation.
Securities Act of 1933
- Unregistered securities offerings: The sale of unregistered tokens may violate this law. Influencers who engage in token sales should ensure that tokens comply with all legal requirements.
Impact on the Crypto Influencer Community
- Increased scrutiny: Crypto Influencers now face increased regulatory scrutiny, forcing them to be more careful with their claims and to fully disclose any compensation.
- Self-censorship: Some Influencers may choose to self-censor to avoid legal issues, which could limit freedom of expression in the cryptocurrency space.
- Changes in practices: Influencers may need to adjust their practices to comply with applicable laws, such as hiring specialised lawyers or using disclosure platforms.
Regulation of Crypto Influencers in the US is constantly evolving and presents significant challenges for this sector. As the cryptocurrency industry continues to mature, we are likely to see clearer and more specific regulations. Crypto Influencers who wish to operate legally and ethically must stay up-to-date on changes in legislation and take the necessary steps to comply with all applicable laws.
Do you think such regulation is necessary in Spain?
To date, regulation only affects companies and those who do paid advertising, however, there are many Crypto Influencers who manage their networks independently, talking about initial offerings and other derivatives, with which they intend to profit, as happens in the United States, and that in the long run it is not known if it can be counterproductive for the new investor.
Disclaimer: The information set out herein should not be taken as financial advice or investment recommendations. All investments and trading involve risk and it is the responsibility of each individual to do their due diligence before making any investment decision.
