The Australian Securities and Investment Commission (ASIC) has warned cryptocurrency investors against “FinTokers.” The latter are a new breed of influencers who utilize social media platforms to explain cryptocurrencies and other investment assets.
We find this latest virtual currency report very interesting. We agree that social media finance influencers or “fin-fluencers” are on the rise worldwide nowadays.
We do not think there is anything wrong with social media finance influencers, as many of them intend to help new and young investors navigate the evolving international financial system. But we also appreciate the Australian Securities and Investment Commission’s concern on this trend as we believe they can help safeguard young and unwitting cryptocurrency investors.
According to the report posted online by InTheBlack, an online magazine delivering relevant and up-to-date information about finance, business, accounting, and important insights into strategic thought leadership, FinTokers are social media finance influencers who employ TikTok, Facebook, Reddit, YouTube, and Instagram to explain virtual asset investment.
These “fin-fluencers” also enlighten their audiences about stock market investing, exchange-traded funds or ETFs, and other niche investment products. FinTokers’ presence has sparked an interesting regulatory debate lately in Australia as most of them reportedly share their viewpoints with thousands of social media followers without any regulatory oversight or license.
The increase in these social media finance influencer numbers commenced during the COVID-19 pandemic lockdowns. In Australia, a flood of retail investors helped trading volumes surge by 66 percent from January to May 2020, surpassing institutional investment during that period.
The ASIC became concerned with this trend in a volatile market as data and market movement rose. This government agency warned that FinTokers or social media finance influencers and social trading contributed to herd momentum in speculative stocks.
It is illegal to dispense financial advice without a license in Australia. Hefty penalties worth A$133,200, or about US$99,646.92 at the time of writing, and up to five years’ jail time may apply to violators.
The ASIC is watching the situation involving FinTokers closely. Additionally, it is actively on the lookout on social media for examples of unlicensed financial advice.
The ASIC is encouraging whistleblowing on recurrent illegal behavior. We support the Australian Securities and Investment Commission or ASIC in penalizing FinTokers who do not possess a license to give cryptocurrency investment advice.
We are well aware that today’s new investors are young people, who are the millennials and Generation Z. Although these new investors are digitally savvy and have easy access to informative online resources about virtual currency investing, many of them may not have strong financial literacy that can help them tell apart good and bad cryptocurrency investment advice.
We also learned that unlicensed FinTokers have been behind numerous incidents of fraud. With the ASIC taking action, we believe young investors can get the protection they need against vicious scammers determined to steal their hard-earned investment funds.