The European Union bill aiming to regulate cryptocurrencies could result in crypto influencers being charged with market manipulation if they fail to disclose potential conflicts of interest.
The Markets in Crypto Assets (MiCA) bill, which has been approved by the European Parliament Committee on Economic and Monetary Affairs on Oct. 10, is expected to be legislated after a few more hurdles.
Patrick Hansen, stablecoin issuer Circle’s director of EU strategy and policy, has been closely following the passage of the bill and brought attention to a section in a Nov. 1 tweet that referred to public comments made without proper disclosure.
The section Hansen highlighted reads that voicing opinions on crypto-assets after taking out positions on them and not disclosing that conflict of interest effectively could be regarded as market manipulation.
The section is part of measures included within the MiCA bill aiming to “prevent insider dealing, unlawful disclosure of inside information and market manipulation related to crypto-assets, in order to ensure the integrity of crypto-asset markets.”
The passage has gained some interest from the crypto community, and a related post on Reddit’s cryptocurrency subreddit suggests that the community is supportive, with the thread's top comment stating:
“Shilling certain projects and never taking responsibility for the losses they inflict upon people. It's about time those influencers get what they deserve.”
Whilst MiCA is unlikely to be fully applicable until 2024, it seems very likely to pass, with Hansen even referring to it as a “pure formality” following the finalization of the text on Oct. 5.
The Union Bank of the Philippines, or simply UnionBank — one of the largest universal banks in the Philippines — has launched a pilot program for Bitcoin and Ether custody and trading services for select retail customers, the firm said in a joint announcement on Nov. 2.
The new investment and trading feature launched in collaboration with Swiss crypto technology firm Metaco, with UnionBank going live on Metaco’s digital asset platform Harmonize. UnionBank initially partnered with Metaco for the development of crypto trading services in January 2022.
Licensed and supervised by the Philippines’ central bank, Bangko Sentral ng Pilipinas (BSP), UnionBank has been actively exploring the crypto industry in recent years. In 2019, UnionBank launched a payments-focused stablecoin pegged to the Philippine peso.
Henry Aguda, chief technology officer and chief transformation officer at UnionBank, said that Metaco has been critical in the bank’s goal to provide “customer-centric” services in the Philippines. He also noted that UnionBank is among the early regulated adopters of crypto in the country, stating:
“We are proud to continue UnionBank’s series of industry firsts, this time being the first regulated bank in the country allowing digital currency exchange features for clients.”
The news comes shortly after Philippine President Ferdinand Marcos highlighted the importance of adopting blockchain technology to master digital banking and digital transactions.
In an official presidential speech published in September 2022, Marcos referred to several related milestones by UnionBank, stating:
“The track record of UnionBank in creating opportunities through innovation and digital solutions in the banking sector is uncontested.”
Previously, BSP also warned the public against using non-local crypto trading platforms, stressing that dealing with foreign virtual asset service providers poses challenges in enforcing consumer protection. As of August, there were 19 registered VASPs in the Philippines.
Crypto influencers may need to practice what they preach and “do their own research” when it comes to sharing their crypto tips.
According to several digital asset lawyers, the popular disclaimer “this is not financial advice” — may not actually protect them in the eyes of the law.
United-States-based securities lawyer Matthew Nielsen from Bracewell LLP told Cointelegraph that while its “best practice” for influencers to disclose that “this is not financial advice,” simply saying the term will not protect them from the law as the “federal and state securities laws heavily regulate who can offer investment advice.”
Australian financial regulatory lawyer Liam Hennessy, a partner at Gadens, explained that “advice warnings” are “by and large pretty useless,” while Australian digital lawyer Michael Bacina of Piper Alderman added that they aren’t “magic words which when uttered will disclaim liability.”
Crypto influencers and celebrity ambassadors have been increasingly finding themselves under the scrutiny of regulations, particularly in the United States.
Nielsen cited the recent Kim Kardashian case as an example, where Kardashian was charged by the SEC for failing to disclose how much she received to promote EthereumMax to her followers.
Influencers feeling the pressure
Crypto influencer Mason Versluis, aka Crypto Mason, who has over a million followers on Tik Tok, told Cointelegraph that he can’t stress enough to his followers that his content should not “be taken as financial advice.”
Versluis however said that despite using the disclaimer “this is not financial advice,” it’s important for influencers to be mindful that some people do “make financial moves according to what certain influencers say.”
He also stressed how difficult it can be to determine whether a project will end up in a “rug pull” situation as influencers “simply deal with the marketing team,” and generally have no contact “with any of the developers or owners.”
Australian crypto influencer Ivan Vantagiato, aka Crypto Serpent who has amassed 68,000 followers on TikTok says that influencers should do their due diligence researching a crypto project before running a promotion.
Hennessy believes the best way for crypto influencers to protect themselves is to be able to determine “what token is a security and what token is not a security.”
He further explained that it’s critical to understand that a “derivative is a product that derives its value from something else,” and you can be “criminally liable” for promoting derivatives.
Meanwhile, Bacina noted that an influencer residing in Australia is required to have a license to give out financial advice, and that “no disclaimer is going to give protection.”
This Daily Dose was brought to you by Cointelegraph.