Social media giant TikTok has taken a drastic step toward not only banning cryptocurrency influencers on its platform but all creators promoting financial services. These include, but are not limited to, cryptocurrencies, buy now pay later companies, loans, credit cards, and Forex companies.
The move is aimed at halting a growing tide of unsuitable high-risk investments and frauds being promoted on social media, which will also hit reputable financial firms.
TikTok has come under scrutiny for allowing unregulated financial advice, which could mislead younger investors.
According to a report by the United Kingdom’s Financial Conduct Authority (FCA), TikTok has been used to target young and naive investors who are looking to make a quick buck. Many of these influencers were suggesting people invest heavily in stocks such as GameStop and AMC.
“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 FCA report reads.
However, the ability to advertise on TikTok is still an option for some, as the real issue lies with the influencers themselves. Influencers are generally 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.
Cryptocurrencies have been growing rapidly over time, with cryptocurrencies such as bitcoin, the largest cryptocurrency by market capitalization, recording an 11% yearly growth to date; the cryptocurrency hit an all-time high of $65,000 earlier this year with investors watching out for further growth.