The growing influence of social media personalities and artificial intelligence in financial decision-making is raising new concerns among regulators. Australia’s financial watchdog, the Australian Securities and Investments Commission (ASIC), has issued a warning about the risks posed by so-called “finfluencers” and AI-generated financial advice, particularly among younger investors exploring cryptocurrency markets.
The warning follows new research showing that 23% of Gen Z Australians currently own cryptocurrency, highlighting how digital assets have become a major entry point into investing for younger generations.
Regulators say the trend reflects a shift in how people receive financial information. Instead of traditional advisors or banks, many young investors now turn to social media, YouTube channels, and AI tools for guidance on investing and trading.
While these platforms can make financial education more accessible, ASIC warns they also create new risks. Unverified online advice, viral hype, and promotional content can push inexperienced investors toward high-risk assets like cryptocurrencies without fully understanding the potential consequences.
The Rise of Finfluencers and AI Investment Advice
Over the past few years, “finfluencers” – social media influencers who discuss financial products – have become a powerful force in online investing culture. These creators often share content about cryptocurrency trading, market trends, and investment strategies with large online audiences.
At the same time, artificial intelligence tools are increasingly being used to answer financial questions or generate investment insights. Young investors are experimenting with AI chatbots, automated trading strategies, and AI-driven research tools to guide their financial decisions.
ASIC’s research indicates that many Gen Z users place significant trust in these sources. According to survey data, 64% of respondents said they trust AI platforms for financial information, while 52% trust financial influencers online.
This combination of social media and AI-generated advice is reshaping how the next generation approaches investing. However, regulators argue that trust in these sources may be misplaced.
Financial information shared online can be incomplete, biased, or designed primarily to attract engagement rather than provide accurate guidance.
Social Media Dominates Financial Research for Gen Z
ASIC’s research highlights just how deeply social media influences financial behavior among younger investors.
The study found that 63% of Gen Z respondents use social media platforms to obtain financial information or guidance. YouTube also plays a major role, with 30% turning to video content for financial advice, while 18% reported using AI tools for decision-making.
Platforms like TikTok, Instagram, and YouTube allow influencers to reach millions of viewers with simple explanations of financial concepts. For beginners, this content can be easy to understand and appealing compared to traditional financial literature.
However, regulators warn that algorithms often prioritize content that generates views, shares, and comments. As a result, sensational or speculative investment ideas can spread quickly, even when they lack credible evidence.
ASIC Commissioner Alan Kirkland emphasized that young investors should carefully verify the information they encounter online.
He warned that financial content on social media or AI platforms can sometimes be “incomplete, promotional or misleading,” which increases the risk of poor financial decisions.
Crypto Becomes a Popular Entry Point for New Investors
One of the most striking findings in ASIC’s research is the growing role of cryptocurrency in Gen Z investment portfolios.
According to the survey, 23% of Gen Z participants own cryptocurrency, making digital assets one of the most popular investment choices among young investors.
In comparison, only 18% reported owning shares, showing that crypto has become a more common investment starting point than traditional stock market assets for many younger people.
However, regulators note that a large portion of these crypto investors are adopting speculative strategies.
Among Gen Z crypto holders, 66% said they engage in short-term or speculative trading, often influenced by online trends and market hype.
Some investors attempt to buy newly launched tokens or meme coins in hopes of quick profits. Others trade based on recommendations from social media influencers or trending online discussions.
While these strategies may occasionally produce gains, regulators say they also expose inexperienced investors to significant financial risks.
The Risk of Misinformation and Online Hype
Social media can amplify excitement around investment opportunities, particularly in fast-moving markets like cryptocurrency. Viral content can create a sense of urgency or fear of missing out (FOMO), encouraging people to invest without conducting proper research.
Regulators say this dynamic is particularly dangerous when combined with influencer marketing.
Many finfluencers earn revenue through advertising, sponsorships, affiliate links, or token promotions. In some cases, they may have financial incentives to promote certain investments without clearly disclosing conflicts of interest.
International regulators have increasingly warned that such practices can mislead retail investors. Research from global financial authorities shows that online promotion can generate hype around speculative assets, including meme coins and other highly volatile cryptocurrencies.
When inexperienced investors follow these recommendations, they may underestimate the risks involved.
Cryptocurrency markets are known for extreme price swings, and many new digital tokens have limited long-term value or utility.
Increased Exposure to Crypto Marketing and Scams
Another concern raised by regulators is the growing exposure of young investors to crypto advertising and unsolicited investment offers.
ASIC’s research found that 72% of Gen Z respondents had seen cryptocurrency investment advertising on social media during the past year.
Additionally, 41% reported being contacted by someone offering to help them invest in cryptocurrency, raising concerns about potential scams and fraudulent schemes.
Scammers often exploit social media platforms to promote fake investment opportunities or impersonate legitimate financial professionals. Some schemes involve impersonation accounts, fake trading platforms, or promises of guaranteed profits.
Because cryptocurrencies operate on decentralized networks, recovering funds lost to scams can be extremely difficult.
Regulators Urge Young Investors to Verify Information
ASIC is encouraging Gen Z investors to adopt a more cautious approach when seeking financial advice online.
Rather than relying solely on social media or AI tools, regulators recommend comparing information with credible sources such as licensed financial advisors or government-backed financial education platforms.
Young investors are also encouraged to verify whether individuals providing financial advice are properly licensed or authorized to offer such guidance.
ASIC stresses that popularity on social media does not guarantee expertise.
Regulators say investors should also consider their own financial goals, risk tolerance, and long-term investment strategies before making decisions.
A New Challenge for Financial Regulation
The rise of AI-driven advice and social media influencers presents a new challenge for financial regulators around the world.
Traditional financial regulation was designed for licensed professionals and regulated financial institutions. However, online platforms allow anyone with a large following to discuss investment strategies or promote financial products.
Regulators are increasingly exploring ways to address this issue through enforcement actions, monitoring tools, and public awareness campaigns.
Some jurisdictions have already issued warnings or penalties against influencers who provide unlicensed financial advice or promote high-risk investments without proper disclosures.
As digital finance continues to evolve, regulators will likely develop new frameworks to monitor online financial promotion and protect retail investors.
The Future of Crypto Investing Among Gen Z
Despite regulatory concerns, cryptocurrency remains an attractive investment category for many younger investors.
Digital assets are often perceived as innovative, accessible, and aligned with the technology-driven economy that Gen Z has grown up with.
However, regulators emphasize that cryptocurrency investing should be approached with caution.
The combination of social media hype, AI-generated advice, and speculative trading can create a volatile environment where inexperienced investors may face significant financial losses.
ASIC’s warning serves as a reminder that while new technologies can improve access to financial knowledge, they should not replace critical thinking and proper research.
For Gen Z investors entering the world of crypto, the key challenge will be balancing innovation with informed decision-making.
