According to the Daily Mail, social media giant TikTok has taken a drastic move toward not only banning bitcoin influencers on its site, but also all creators advocating financial services.
These include, but are not limited to, cryptocurrencies, purchase now pay later businesses, loans, credit cards, and Forex firms.
The measure, according to the article, is directly focused at putting a stop to the concerning trend of high-risk investments being promoted on social media.
Many of these risky investments are nothing more than various frauds, scams, or schemes. As a result of this shadowbanning, legitimate financial firms will be impacted and will no longer be able to use influencers in the same way that they do now.
For some, the possibility to promote on TikTok remains an option, as the actual issue is with the influencers themselves. Influencers are typically compensated in the form of a fixed fee or commission for endorsing specific cryptocurrencies, exchanges, dApps, or other connected products.
According to the ad policy, financial services companies are permitted to promote to targeted users over the age of 18. Ads promoting digital assets and cryptos, on the other hand, are already forbidden from being purchased on the platform.
With many crypto-related companies leveraging TikTok influencers known as “Fintok” advisers to expand their worldwide reach, these new limitations will have a significant impact on how the industry presents itself.
Without the option to pay influencers or TikTok for advertising, crypto’s time on the platform may be coming to an end.
TikTok under fire for unregulated financial advice
TikTok’s decision is primarily motivated by the recent scrutiny company has received for carelessly allowing deceptive financial advice. The basis for concern is that inexperienced young investors can become entangled in get-rich-quick scams and wind up in significant financial problems.
Some fintok influencers gave seemingly innocuous advice, such as buying a stock while it is rising and selling when it begins to fall. Others, on the other hand, claim to be able to make you a billionaire in a month or to sell online investment courses for tens of thousands of dollars.
TikTok has been used to target young and naive investors hoping to make a quick buck, according to a February study by the United Kingdom’s Financial Conduct Authority (FCA). Many of these influencers advised individuals to invest substantially in stocks like GameStop and AMC.
According to the FCA research, “the findings suggest a new, younger, more diversified group of consumers getting involved in higher-risk investments, possibly motivated in part by the accessibility given by new investment apps.” According to the report, over 60% of young investors believe that a loss of their investment will have a “fundamental influence on their future lifestyle.”