TikTok, a popular short-video app, has updated its branded content policy to prohibit the promotion of a slew of financial products, including cryptocurrencies, as concerns have emerged over the platform’s potential to lure young, uninformed investors into crypto.
TikTok wrote in its policy that all financial services and products — including cryptocurrency, lending and the management of financial assets, loans and credit cards, buy-now-pay-later services, pyramid schemes and “get rich quick” schemes — are prohibited from being promoted as branded content on its platform.
“These policies are designed to ensure a safe and positive environment for our users,” TikTok said in the policy note.
The social media app’s move comes as many influencers on the platform have promoted meme-based coins and encouraged their young followers to get into the new class of investments.
The UK’s Financial Conduct Authority said in March that, according to recent research findings, there was a new, younger, more diverse group of consumers getting involved in higher-risk investments such as cryptocurrencies and foreign exchange, potentially prompted in part by the accessibility offered by new investment apps.
The FCA said that this newer group of self-investors were more reliant on information sources such as YouTube and social media for tips and news. The FCA report also indicated that higher-risk products may not always be suitable for such consumers, as nearly 60% of them claim that a significant investment loss would have a fundamental impact on their current or future lifestyle.
TikTok’s decision to ban crypto-related ads could mean that “the potential regulatory costs outweigh the revenue or profits from crypto and financial services ads,” Meng Liu, a blockchain analyst at research firm Forrester who previously worked for Ripple, told Forkast.News.
“TikTok is a global platform, so it needs to comply with laws and regulations in different jurisdictions,” Liu said. “The crypto regulations and laws are still opaque in many countries. Therefore, the potential compliance costs are uncertain and can be huge.”
TikTok is not alone in pouring cold water on aggressive advertisers. Facebook, for instance, has implemented policies stipulating that ads must not promote financial products and services that are frequently associated with misleading or deceptive promotional practices. It has specifically pointed out that promotions of initial coin offerings are not permitted.