On the 31st of May, the Financial Planning Standards Board (FPSB) released a statement that revealed its stance on digital currencies and financial influencers. The board proposed the control of investments in digital currencies, specifically targeting crypto influencers.
The FPSB has the responsibility of proposing rules in the financial ecosystem. At the moment, the recent proposition by the FPSB has been forwarded to the International Organization of Securities Commissions (IOSCO).
The IOSCO strongly believes that the Covid pandemic which hit hard in 2020 has had a hand in the retail market issues we currently experience. During the pandemic, people were encouraged to invest in cryptocurrencies as an alternative source of income. Due to the high rate of inflation globally, many individuals have sought investments with an extremely high yield. This has done more harm than good to the economy as many investments with extremely high returns end up failing to deliver.
Influencers and the Crypto Markets
Many influencers have shilled crypto tokens and promised high returns to their followers. Sadly, many newbies in the crypto ecosystem fall for this and end up getting “rekt.”
The FPSB, which isn’t fully in support of digital currencies, wants these influencers to be held responsible when things go South.
According to the board, influencers who promote these tokens via social media or any other means are actually giving financial advice. Amazingly, these influencers lack the right and certification to give financial advice. Many influencers are paid by the project’s lead to make loud shout-outs about the crypto project.
In addition to holding influencers responsible for losses, the FPSB proposed a restriction on the credit cards used for the purchase of cryptocurrencies. While the intentions of the board may be positive, it also has a touch of negativity. Many crypto users enjoy the freedom associated with buying and selling cryptocurrencies. Heavy restrictions do not align with decentralization. In the end, the ultimate solution may be for individual inventors to diligently research a crypto project before investing. Individuals should also invest only what they can afford to lose.
