The Financial Planning Standards Board (FPSB), a professional body tasked with granting licenses and certifications to financial planners, has proposed11 recommendations that will help regulate the fast-growing cryptocurrency industry.
The advice shared came off as a recommendation to the International Organization of Securities Commissions (IOSOC) Retail Market Conduct Task Force on how regulators can address the adverse impacts of the risky digital currency ecosystem.
The FPSB said there is a growing trend in the space whereby social media influencers are often assuming the roles of financial advisors. As part of the FPSB recommendations, social media influencers addressed as ‘Fin-fluencers’ should be duly registered and make them exhibit a certain level of professionalism regarding the knowledge they claim to exhibit.
The FPSB also recommended that financial regulators prohibit using credit cards to purchase complex financial products while establishing a regulatory ‘sandbox’ for social media influencers and publishing those operating in the sandbox on a public register. This model if appropriately modeled is bound to help these and other financial advisors to be held accountable for the advice they offer.
“Financial fraud and scams are certainly not new, but the rapid emergence and evolution of crypto assets and other complex digital assets means the level of risk and exposure for retail investors is becoming heightened,” said FPSB Head of Stakeholder Engagement Dante De Gori, CFP. “Licensing and product regulation are struggling to keep up with this fast-changing landscape, leaving financial planners unsure of their regulatory obligations and leaving retail investors to go it alone, guided by marketing campaigns, often with harmful consequences.”
The FPSB has joined the list of bodies and individuals calling for additional scrutiny of the crypto ecosystem as many believe the current state of the industry is not safe for investors across the board.
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