The FCA Influencer Program And Bitcoin

Telling people to avoid “high-risk” investments could be a guise for encouraging people to stay within legacy finance.

Here come the influencers. The Financial Conduct Authority (FCA) in the U.K. has announced an 11 million British pound (GBP) campaign enlisting celebrities and influencers to warn the general public of the dangers of high-risk investments. The FCA is a financial regulatory authority in the U.K. that was established in 2013. It operates independently of the U.K. government.

This is an interesting dynamic to consider given the context of public messaging relating to COVID-19 information. There are many examples of programs paying influencers on social media to propagate specific messaging relating to COVID, such as complying with mask mandates, getting vaccinated, etc. Now the point here isn’t which side of any of these individuals is factually correct or effective, it’s just about the messaging mechanisms, incentives and trust people place in others. Say what you want about the societal health of influencer culture, the fact remains that it exists and large amounts of people actually place some degree of trust in influencers they follow on social media. This is why government programs of this sort relating to COVID have been effective.

The FCA is now tapping this playbook to begin a campaign messaging against “high-risk” investments to the wider public. During the COVID lockdowns in 2020 there was a massive uptick in retail investors trading on platforms like Robinhood, especially among Millennials. The huge unemployment spike in combination with unemployment benefits, stimulus payments and rent moratoriums left many people with excess cash and plenty of time on their hands. Many invested in cryptocurrencies and so-called “meme stocks.” It’s probably fair to assume that a lot of these individuals lacked fundamental market understanding or were just chasing short-term gains.

The argument can be made that this was highly reckless behavior and that many of these new investors in the end will wind up financially hurting themselves. That is exactly what the FCA is claiming. In their announcement, the “high-risk” investments they are going to spread cautionary messaging about specifically includes mentions of cryptocurrencies and how many of these new retail investors’ first investments were cryptocurrencies. For instance, on Robinhood a massive portion of the money that was invested into cryptocurrencies was flowing into Dogecoin.

Now, it’s not entirely unreasonable to warn people against taking actions that could be financially harmful to themselves. However, there is more context to this FCA campaign than just that. They specifically mention in the announcement that 8.6 million people hold more than 10,000 GBP of “investable assets in cash.” Why? Because the FCA is trying to directly incentivize 1/5th of those people in the next five years to start investing. So at the same time they are going to start paying social media influencers to propagate warnings of “high-risk” investments in order to ostensibly protect investors, they are actively trying to encourage more and more of the population to start investing their money instead of holding it in cash.

Do you see the conflict of interests and goals here? All investment comes with risk and that will always be the case. This seems much more likely to be an attempt by the FCA to control what people are investing in rather than simply protecting them from dangerous investments. Bitcoin is a huge potential threat to legacy markets. The more people invest in bitcoin, the more liquidity it takes out of the legacy market. Every dollar I use to invest in bitcoin is a dollar that doesn’t pump up the value of the S&P 500. Every dollar I use to invest in bitcoin is a dollar that doesn’t drive up the price of real estate in some location. All of these markets depend on new, younger money continuing to use them as intergenerational wealth is transferred, in addition to older money selling to facilitate retirement. I have to imagine the proposition of bitcoin and other cryptocurrencies soaking up that liquidity instead of the stock market, real estate, etc. is a pretty terrifying proposition for legacy institutions.

We’re in the phase of “this is how they fight us.” But it’s not going to get nasty and obvious right at the start. It’s going to take the shape of things like this program financially incentivizing influencers who have built up trust in the wider populace to spread the message “Bitcoin is bad, but the stock market is good.” They’ll try to pressure and twist peoples’ arms into giving up their hard-earned cash and putting it into the market to “not miss out on gains.” I don’t think they really care about people like that; they simply see that money as a necessary fuel to keep the ponzi scheme going and, just like America when it comes to oil reserves, they will do whatever they can to acquire it.

Don’t lose sight of that. This is an information war coming and programs like this are one of the ways they are fought.

This is a guest post by Shinobi. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.