Recently, French lawmakers proposed an amendment to Bill 790 that would criminalize promoting crypto on social media. The amendment proposes a two-year prison sentence and a €30,000 ($32,600) fine for violators.
The bill comes at a time when cryptocurrency investments are gaining popularity and could potentially expose people to risks. After all, investing in crypto is risky, especially if you don’t do the research yourself.
Technologists and VCs have lauded cryptocurrency and its associated technologies for their potential to alter how we manage financial transactions. But there is also concern regarding its high volatility and the lack of regulation in many countries. France’s ban seeks to address these concerns by blocking exposure to crypto-related risks without proper diligence or supervision.
A Rationale for the Amendment?
The proposed amendment does not target crypto specifically. It also includes banning influencers from promoting health products, gambling, and video games through their social channels. But given the heated relationship between world governments and crypto, understanding the need for this amendment is necessary.
In the last year, several social media influencers received fines for misleading followers.
The SEC charged Kim Kardashian for promoting EthereumMax without letting on that the company paid her for the promotion. Logan Paul was sued for encouraging followers to buy into the Web3 game CryptoZoo, which turned into a rug pull. Incidents like these show that regulators need to take steps to protect the public.
But is a ban on advertising cryptocurrencies on social media the answer? And in a global world, is such a ban even viable?
To be clear, the bill does not ban promoting all crypto assets, just ones that are not licensed. The rub is that currently, not a single crypto-based company in France has one. Additionally, the hurdles involved to obtain a permit from the Autorité des Marchés Financiers, the nation’s market regulator, are still unclear.
Drawbacks to an All-Out Ban
The crypto industry is growing faster than ever, with very few signs of slowing, even during the current bear market. France’s ban, though well meant, might just stifle their own interests.
As with big tech, crypto companies will move to places with more welcoming laws and tax breaks. And influencers will either move out of the country or continue to post what they wish through proxy.
Before going forward, French leaders should ask themselves whether there might be a better way to combat misleading content online. Media outlets distinguish between news items and sponsored content. And many crypto media companies and newsletters clearly state that their content is not financial advice.
Perhaps a similar approach could help people differentiate between ads and organic content. Then, France wouldn’t have to forfeit its reputation as a tech- and innovation-friendly place to do business.
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