UAE 'finfluencers': Investors need to verify - and report - unauthorized advise

Dubai: Don’t wait – social media influencers in the UAE talking finance and investments need to register with the regulator ASAP.

There is no time to be wasted in protecting younger social media audiences from taking on too risky an investment merely because some influencer felt that it was a good one to make. Even investing based on half-baked advice available on social media platforms can go sour – and pretty fast at that.

The UAE’s SCA (Securities & Commodities Authority) is adding to the protection that these investors will have.

‘Any unauthorized financial activities’ must be reported on the SCA website or through the call center. Investors following these finfluencers will also need to verify whether they are licensed by SCA before taking up any of their recommendations.

According to market sources, finfluencers based in the UAE are rushing to register to bag the licenses once SCA approves them.

The new rule applies only to influencers based in the UAE, and comes into being as more retail investors have taken to crypto investments and trading in commodities such as gold.

Recently, Dubai has also allowed investors to take up tokenized investments in property, with minimum investments from Dh2,000.

Across markets, there are a 'rising number of cases in which finfluencers fail to comply with regulatory standards'. "This underscores the urgent need to develop joint supervisory tools and enhance financial literacy through coordinated, cross-border oversight," said the SCA in a statement.

The UAE has been speeding up regulatory oversight of new-age platforms and processes, whether that relates to consumer facing 'buy now pay later' schemes or the kind of content that goes online.

The UAe and other Gulf markets have seen significant inflows of new - and small ticket - investors chasing trends in Bitcoin, gold and currency futures, as well as stock market purchases. Often, these are based on random commentary provided by social media finfluencers - and with a high risk attached to it.

"The adoption of a dedicated regulatory framework for finfluencers in the UAE reflects the Authority’s strategic commitment to promoting transparency," said Waleed Saeed Al Awadhi, CEO of Securities and Commodities Authority.

"This, in turn, strengthens investor confidence and ensures the protection of their rights.”