Up to now couple of months, influencers and celebrities have been increasingly selling crypto drives. While many work with outstanding companies, it’s to be expected to see paid posts from notable individuals advancing problematic digital asset providers. An stunning example is US celeb star Kim Kardashian who sparked fairly some controversy in June when she advanced the Ethereum Max crypto challenge to her more prominent than 250 million followers on Instagram. Given how long people spend via social media, it regularly turns into a wellspring of truth for personal finance decision-making.
At the same time, Randell called for urgent action to regulate the advertisement of crypto projects with a major focus on social media ads and influencer promotions to eliminate fraudulent activity and protect investors.
Consequently, in a latest speech, the UK Monetary Conduct Authority (FCA) chair Charles Randell argued that Kardashian’s put up was probably the “monetary promotion with the one greatest viewers attain in historical past” whereas warning customers concerning the rising dangers of influencer adverts inside the crypto business.
From our point of view, as crypto industry players at CEX.IO, it makes perfect sense for the FCA to scrutinize influencers on social media. Professional traders might not pay much attention to celebrities’ statements other than for their sentimental value. Consumers, on the other hand, can definitely feel compelled to follow the advice in such promotions. And it is the FCA’s role to protect the consumer.
For that reason, it is reasonable for the FCA to take a strong stance in wishing (or demanding) more transparency within the crypto industry. That means celebrities, who take advertising deals, need to look beyond monetary compensation, evaluating their involvement in promotions. On the other hand, crypto projects, who wish to leverage the benefits of social media, need to understand the line between advertising and deception. More so, an educated consumer is also an empowered consumer who can question what’s on the screen, even if it comes from a favorite character.
And, when somebody with a devoted following base promotes a digital asset or a strategy, even an ad disclosure (like in Kim’s case) may not be enough to make people think about risks critically.
And it should be clear for anyone who has spent at least a few weeks within the industry that digital assets have a rather steep learning curve as the underlying technology and concepts are rather complex (just think about explaining yield farming to someone unfamiliar with crypto). In addition to this, there’s great money involved within the space, which consumers can easily lose if they are not careful enough.
For these reasons, it’s crucial to highlight the risks of crypto investments, crack down on dubious marketing messages and ads, and be open and transparent with consumers.
This has been exactly the case with loans and investments in the financial sector, where one small misunderstanding (or communications trick from the service provider’s side) can cause heavy losses for a consumer. As a result, these have been at the center of focus for the FCA and other regulatory bodies all over the world to promote clarity and transparency concerning a loan’s APR (annual percentage rate) or an investment’s potential risk. And this is what should be done with crypto as well. Eventually, with effective communication and a consumer-friendly approach in terms of advertising, we can provide all the relevant and factual information to consumers that allow them to make the right choices when it comes to their money. And sending a message to these three parties – celebrities, crypto projects, and consumers – is what the FCA is doing. I think this is where true industry leaders can work alongside regulators to spread awareness and educate consumers.
While being completely clear and honest might scare away some, it won’t have much impact on those consumers who are looking to join the crypto industry. On the contrary, people will get more familiar with the technology and how things work, which will allow them to make informed choices. And, to be perfectly honest, it’s not a viable strategy for a reputable business to attract consumers with deception or by holding back the truth. In the end, honesty and transparency are what wins out. And all of us in the industry should earn our customers’ trust by being straight with them.
- Celebrities should avoid fooling inexperienced crypto investors
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Original posted at www.bollyinside.com