Popular social media app TikTok has updated its branded content policy, banning financial services advertising which includes cryptocurrencies.
The China-owned social media giant has taken a drastic step to not only banning crypto influencers on its platform but all creators promoting financial services, according to the Daily Mail. These include, but are not limited to, cryptocurrencies, buy now include pay later companies, loans, credit cards, and Forex companies.
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Per the report, the move is directed at hindering the trend of so-called high-risk investments touted on social media. While some coins such as dogecoin are essentially scams, schemes of various frauds, the move is essentially throwing the baby out with the bath water. As a result of this shadow banning, legitimate financial firms will also be affected and no longer be able to utilise influencers in the same way they do now.
The ability to advertise on TikTok is still an option for some, as the real issue lays with some influencers who promote scam projects. In some cases, influencers are paid a flat fee or commission for endorsing certain coins, exchanges, dApps, or other related products. The ad policy states that financial services companies are allowed to advertise to targeted users over the age of 18. However, ads for digital assets and cryptos are not allowed to advertise on the platform.
With many crypto-adjacent companies using TikTok, known as “Fintok” advisors, to grow their reach, these new rules could have a dramatic effect on how the industry operates and might spark an exodus from the platform. Without the ability to pay either influencers or TikTok for advertising, crypto’s time on the platform could be coming to an end.
TikTok under fire for non-financial advice?
The main reason behind the decision is allegedly due to irresponsibly allowing misleading financial advice. The concern is that young investors, who might not know any better, could get caught up in get-rich-quick schemes, ending up in serious financial trouble.
Some of the fintok influencers posted harmless things like suggesting to buy a stock as it is rising and then sell when it begins to dip. At the same time, others promise untold riches which could be obtained in a month.
According to a February report by the UK’s Financial Conduct Authority (FCA), TikTok has been used to target young investors who are looking to make a quick buck. Many influencers were apparently suggesting people invest heavily in stocks like GameStop and AMC, for which an entire scandal emerged sometime last year.
The FCA report reads, “The findings reveal there is a new, younger, more diverse group of consumers getting involved in higher-risk investments, potentially prompted in part by the accessibility offered by new investment apps.” The report goes on to state that around 60% of young investors claim that a loss of their investment would have a “fundamental impact on their future lifestyle.”
The move comes shortly after China’s harsh crackdown on bitcoin and cryptocurrencies, which sparked an exodus of miners out of the Chinese regime.
This raises questions as to whether China is attempting to remove competitors to its own central bank digital currency, which is anything but decentralised and subject to the whims of the regime.
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