The hugely popular TikTok social media app has updated its branded content policy to ban the advertising of financial services that include cryptocurrencies.
July 12, 2021, | AtoZ Markets – According to the Daily Mail, the social media giant TikTok has taken a drastic step towards banning not only the promotion of cryptocurrencies on its platform but all creators promoting financial services. These include cryptocurrencies, buy now-pay later companies, loans, credit cards, and Forex companies, among others.
Why TikTok banned crypto advertising?
According to the report, the move aims directly to stem the worrying trend of advertising high-risk investments on social media. Many of these high-risk inadequate investments are nothing but various scams, scams, or schemes. As a result of this ban, legitimate financial firms will also be affected. They will no longer be able to use influencers in the same way as they do now.
Being able to advertise on TikTok is still an option for some, as the real problem is with the influencers themselves. Influencers typically receive a flat fee or commission to endorse certain cryptocurrencies, exchanges, dApps, or other related products. Advertising policies state that financial services companies may advertise to target users over the age of 18. However, ads for digital assets and cryptocurrencies can no longer advertise on the platform.
As many cryptocurrency neighbors use influencers on TikTok, known as "Fintok" advisers, to expand their global reach. These new rules will have a big impact on the way the industry sells itself. Without being able to pay influencers or TikTok for advertising, crypto time on the platform could be running out.
TikTok under fire for unregulated financial advice
The main reason for this TikTok decision is a recent audit, following the irresponsible release of misleading financial advice. A cause for concern is those unfamiliar young investors may get caught up in these types of get-rich-quick schemes and run into serious financial trouble.
Some influencer fintokers posted things that seemed harmless, suggesting buying stocks when they rise and then selling when they begin to decline. Meanwhile, others promise to make you a millionaire in just a month or sell online investment courses for tens of thousands of dollars.
According to a February report by the UK's Financial Conduct Authority (FCA), TikTok has been used to target young and naive investors looking to make a quick profit. Many of these influencers have suggested that people invest heavily in stocks like GameStop and AMC.
The FCA report states:
"The results show that there is a new, younger, more diverse group of consumers engaging in higher-risk investments, potentially driven in part by the availability offered by new investment applications."
The report found that around 60% of young investors say that losing their investment would "have a fundamental impact on their future lifestyle."
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