Israel Proposes New Rules for Financial Influencers, Focusing on Payouts
Israel is considering new regulations for financial influencers, aiming to clarify rules around investment advice and marketing. A proposed bill, published in June 2025, seeks to establish categories for general investment advice and marketing. The framework would offer licensing exemptions for those meeting specific conditions, such as having no personal stake in the asset, avoiding personalized financial services, and not receiving prohibited compensation, alongside mandatory identification and disclosure duties. The proposal also aims to narrow existing exemptions for media advice, excluding social media, and empower the Israel Securities Authority (ISA) to impose swift financial sanctions.
However, the article argues that the proposed regulation primarily focuses on the nature of the activity rather than the assets involved. A significant gap exists concerning assets not classified as securities or financial assets under current law, such as many cryptocurrencies. Recommendations regarding these assets would fall outside the scope of the proposed licensing requirements, leaving a key area of risk for investors unregulated. International surveys and enforcement actions highlight the prominent role of crypto in financial influencer schemes, often leading to short-term price increases followed by underperformance, raising concerns about market manipulation.
A more critical issue, according to the author, involves commercial referrals. Much of financial influencers' activity involves directing clients to brokerage firms, trading platforms, or investment houses for a commission, rather than recommending specific assets. These referrals, often facilitated through unique links or discount codes, may not be classified as investment advice under the current or proposed law, even with a broader interpretation. The ISA has previously addressed similar issues by holding the paying entities accountable.
Examples include regulations for investment advisors interacting with financial product creators and guidance on mutual fund advertisements, where fund managers are responsible for influencer disclosures. Similar principles apply to brokerage licenses, requiring disclosure of external marketers. The article suggests expanding this approach by holding regulated entities that pay influencers responsible for ensuring transparency, preventing misleading advertising, and accurately representing the nature of the service provided. This would address the financial incentives behind such promotions by regulating the funding source.
While holding paying entities accountable could cover a substantial portion of commercial activity, the article notes that influencers themselves should also face disclosure requirements regarding who is behind the promotion, its commercial nature, and compensation details. However, enforcing these disclosure duties on influencers directly may require explicit legal backing, potentially through consumer protection laws or a specific expansion of the advisory law, as seen with the U.S. Federal Trade Commission's role in overseeing influencer-advertiser relationships.
