Americans have a constitutional right to speak freely. Though, apparently, there are exceptions, or at least in some cases, rules to follow in the process.
Celebrity endorsements help improve sales performance for food and beverages, sports apparel, beauty products and tech devices. Stars also promote crypto, which is where legal complexity merges with obscurity.
Are government guidelines applicable?
The Securities and Exchange Commission (SEC)’s role is to protect investors. As such, the Securities Act of 1933 makes it illegal for anyone to “tout” (publicize) a security unless they describe the “security for a consideration received or to be received, directly or indirectly…without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof.”
It’s not enough to let people know you received payment for a crypto ad; you must also expose the amount of money received for your endorsement.
To what extent is the government responsible for sheltering a fan base from making purchasing decisions? One might think due diligence should apply across the board.
Decentralized finance is about as far from regulatory compliance as you can get. That doesn’t stop the SEC from criminalizing influence. However, adherence to securities laws may depend on definitions.
Perhaps agencies will classify “most” cryptocurrencies as securities. In that case, exchange platforms may become “investment brokers” in queue for additional oversight.
Who else would be at risk? Is there a plan to incarcerate coders? And is adopting technological advances really criminal?
It’s virtually impossible to follow policies that haven’t been codified into law. Still, influencers aren’t the only ones who need legal backing to engage in blockchain transactions.
You must protect your interests no matter who suggests you buy a token, coin or any other DeFi classification subject to review. It’s best to get guidance before putting your money – or your mouth – on the line.