Regulators are taking notice of crypto ‘finfluencers’. Because of an increase in general knowledge of cryptocurrencies in recent years,. Financial influencers, often known as “finfluencers,”. Who are rooted in the cryptocurrency space have become increasingly prominent. Global legislators, including those in Australia, which anticipates a boom in the cryptocurrency business. In the coming decade, are debating whether this is financial advice. That should be regulated or collective free speech of a disenfranchised population. Which should not be regulated.
The reality is that hashtags like #crypto and #cryptocurrency, which are popular on TikTok. Have gathered billions of views. From the outside. It may be easy to dismiss finfluencers as speaking to a very tiny number of individuals. This is estimated that Ben Armstrong’s YouTube channel, BitBoy Crypto. Has about 1.44 million subscribers. With each of his videos receiving an average of more than 100,000 views. There have been more than 650,000 views of a video titled “Top 3 Altcoins to Buy RIGHT NOW!”
Forkast received a response from Armstrong. Who stated, “On my channel, we want to be the people’s champion.” The use of cryptocurrency and digital assets is a step forward. A route out of the dysfunctional systems that are preventing millions of people. From achieving financial stability. It is my responsibility to provide my audience. With the most up-to-date and relevant knowledge and education.”
In some ways, social media is a good method to spread crypto news
In some ways, social media is an excellent medium for sharing knowledge about cryptocurrency. It also meets individuals where they are. Providing financial education that was previously only available through colleges and universities. Finfluencers are breaking down what one expert. Has referred to as the “walled garden” of financial institutions. By delivering nuggets like “what are derivatives” in 30-second films to people’s phones. Trent Barnes, principal of ZeroCap, expressed concern that too stringent regulation. Would disproportionately affect individuals. Who are financially disadvantaged as a result of this situation.
“Isn’t it true that regulators are there to potentially protect people? “However, what they’ve also essentially done is prevent people. From accumulating the kind of money that the wealthy can,” Barnes explained. “By utilizing cryptocurrency, individuals now have the opportunity. To outperform Wall Street; yet, they may not necessarily. Have the necessary skills, resources, or tools to do so.”
Moreover, some influencers are not behaving in the best interests of their followers. According to a survey from Chainalysis, the amount of money lost to scammers. Increased by 82 percent in 2021, reaching approximately US$8 billion in bitcoin. Rug pulls account for about US$3 billion of that total. Which is a form of scam in which producers also establish a cryptocurrency.
Then create excitement around the coin — commonly through social media. In order to attract in investors. After a buying frenzy inflates the price of a cryptocurrency. The cryptocurrency’s inventors sell off their own holdings. Causing also the price of the cryptocurrency to plummet. Leaving investors with cryptocurrency that is now worthless.
A high-profile project rug pull regulators
The price of a token based on the popular “Squid Game” series. Dropped from US$2,861 to zero overnight after developers abandoned. The project following massive social media excitement, particularly on Twitter.
Additionally, an unlicensed party offering financial advice is in breach of the Corporations Act 2001. It is also according to the Australian Securities and Investment Commission.
“Anyone offering advise or research – formal, informal, personalized or not. Needs to know they are in-scope of the local regime,” said Urszula McCormack. A financial regulatory lawyer at King & Wood Mallesons.
Recently, Australian Senator Andrew Bragg called for more regulation. Putting also the onus on the platforms themselves.
On how to regulate the regulators online unlicensed financial advice. Bragg remarked at a symposium on finfluencers in Australia last month. “What also happens online must reflect what happens in law and practice.”