TikTok Bans Promotion of Financial Services including Crypto
The wildly popular social media app TikTok has updated its branded content policy to ban touting financial services which includes cryptocurrencies.
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.
Change of Policy
While the policy change does have some exemptions, the newly prohibited bucket of content is “Financial Services and Products”. This category includes, but certainly isn’t limited to, topics including crypto, loans and credit cards, trading platforms, forex trading, commemorative coins, investment services, and more.
However, TikTok’s advertising policy remains the same, which currently allows financial services companies to advertise to people over the age of 18. Despite this, ads for cryptos and digital assets specifically are already prohibited on the platform.
However, despite any real means of regulation, TikTok has become a rising tool for financial information for young consumers. The financial corner of the platform, dubbed ‘FinTok’ or ‘StockTok’, is a massive blend of speculation, over-exaggeration, and actual financial insights or perspectives.
As an extension of this, TikTok has faced increased scrutiny lately for allowing unregulated financial advice throughout the platform.
Young Audience as Target
Crypto “shilling” is certainly not a rarity on social media channels these days, and TikTok is no exception. One recent example is the ‘Save The Kids’ token, shilled by notable influencers on FaZe Clan. Speculation is abound over whether popular influencers who were pushing the token will face legal ramifications.
When it comes to TikTok, the audience is typically much younger as well, with the platform catering to a primarily Gen Z and young Millennial audience. This only furthers scrutiny for the firm.
Of course, crypto demographics are generally seen as being comprised of a younger audience, making TikTok a viable medium for crypto content creation and consumption. In a statement to media outlet FT Adviser, client education head at Informed Choice Martin Bamford stated that he saw the policy change as “clamping down on directly or indirectly sponsored content which leads to an affiliate link, for example to sign up to a trading platform and get free stocks.”
Accordingly, the implications of TikTok’s most recent policy change could likely impact more than just bad actors in crypto. Legitimate financial firms will likely be impacted and will no longer be able to leverage influencers via TikTok in the same ways that they currently do.
TikTok under fire for unregulated financial advice
The main reason behind this decision by TikTok is the recent scrutiny it has faced for irresponsibly allowing misleading financial advice. The cause for concern is that young investors, who don’t know any better, can get caught up in these get-rich-quick types of schemes and end up in serious financial trouble.
Some of the fintok influencers posted things that were seemingly harmless, suggesting to buy a stock as it is rising and then sell when it begins to dip. 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 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 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.”
