The Financial Services Authority's chairman, Charles Randall, cautioned that “some influencers promote coins that turn out simply not to exist at all.
As cryptocurrencies increasingly enter the mainstream, investors should be wary of speculative crypto tokens pushed by celebrities and social-media influencers.
“When she was recently paid to ask her 250 million Instagram followers to speculate on crypto tokens by ’joining the Ethereum Max Community‘, it may have been the financial promotion with the single biggest audience reach in history,” Randall said in prepared remarks for a speech to the Cambridge International Symposium on Economic Crime on Monday.
He repeated that while 2.3 million Britons currently hold these types of tokens, 14% of that total uses credit to purchase them, boosting loss potential. He said around a quarter of a million people falsely believe they are protected by the U.K.’s Financial Services Compensation Scheme if things go wrong.
Randall said regulation of cryptoasset promotions must include paid-for advertising in online platforms, while regulated companies must show they have addressed risks of unregulated activities in relation to digital tokens.Those include Argo Blockchain ARB, -2.63%, a U.K.-listed cryptocurrency miner, that last month filed for a $75 million initial public offering on the Nasdaq Global Market under the ticker ARBK, ARBK.
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