TikTok Warns Influencers from Promoting Cryptos Amid Escalating Fraud Cases
TikTok, Social media platform, announced on Friday that certain ads would no longer be allowed on their forum. Crypto-based promotional content, share trading and buy now pay later are among the forbidden topics, according to an article from FT Adviser on July 8. In addition, TikTok’s new guidelines now globally prohibit the promotion of all financial services and products.
According to the report, the ban aims to halt the worrying trend of risky investments being touted on social media.
Most of these unsuitable high-risk investments are believed to be frauds, scams, or schemes. Legitimate financial firms have been shadowbanned and will also be affected. They will no longer utilize influencers in the same way they do now.
End of the Road
Banks and fintech have enjoyed the benefits of advertising and partnering with influencers on TikTok. For example, Monzo and Revolut post regulator content and savings app Plum have allied with authentic ‘fintok’ voices. Unfortunately, these new rules will put a stop to that. Unable to pay either influencers or TikTok for advertising, crypto’s time on the platform might be over.
In the 2020 Dogecoin (DOGE) hype, TikTok was one of the best promotional sites for the meme coin. Users shared related videos to get more folks to jump on the bandwagon. Other social media platforms have also hosted significant financial markets conversations recently, with stock discussions on Reddit becoming prominent.
The ability to advertise on TikTok is still an option for some, as the real issue lies with influencers. Most influencers are paid a flat fee or commission for endorsing certain coins, exchanges, dApps, or other similar products.
Unregulated Financial Advice
The ad policy states that financial services companies can advertise to targeted users over 18. However, digital assets and cryptos ads are prohibited from buying ads on the platform since they are pyramid schemes and get-rich-quick schemes.
The social media platform has come under scrutiny for allowing unregulated financial advice, which could deceive younger investors.
The Financial Conduct Authority has cautioned that financially vulnerable young investors are drawn in high-risk investments that could cost them a lot.
In March, the regulator said they are worried that some investors are often tempted through online adverts or high-pressure sales tactics. As a result, young investors buy higher-risk products that are very unlikely to be unsuitable for them.
People are uncertain whether TikTok’s ban applies to all financial product discussions or just those which are promotional. Other companies are also beginning to take strict measures on scam adverts on their platforms. For example, Google said they intend to clamp down on saving and investing fraud adverts in the UK.