The European Organization for Consumers (BEUC) has released a report pointing out misleading advertisements for cryptocurrencies on popular social networks.
Today BEUC & consumer groups in 8 countries are taking action against TikTok, Instagram, Twitter & YouTube for facilitating the misleading promotion of crypto assets on social media 🪙. We’ve filed a complaint with @EU_Commission and consumer authorities: https://t.co/b6NYsBl4VM pic.twitter.com/w5iLMy4h1i
— The Consumer Voice (@beuc) June 8, 2023
BEUC noted that Instagram, YouTube, Twitter, Facebook, and TikTok are “key players” in promoting digital assets. According to the organization, users are not fully aware of the risks associated with them.
According to the report, Facebook advertisers are circumventing rules that prohibit the promotion of unlicensed financial platforms.
“Due to their high volatility and speculative nature, digital assets remain a very risky investment product that is not suitable for many consumers. Unlike traditional investments, cryptocurrency is not backed by material values and is mainly based on speculation, which makes it very volatile,” the organization said.
Regarding Twitter, representatives of the association noted the decision of Elon Musk to change the classic logo of the social network to the Dogecoin mascot, which caused the pump of the coin by almost 25%. At the same time, the platform policy prohibits any advertising of cryptocurrencies.
BEUC representatives also drew attention to the so-called “finfluencers”, which are “an important source of information” for a younger audience.
“Influencers on social media are increasingly promising consumers to get rich quick. Unfortunately, in most cases, these claims are too good to be true, and investors risk losing a lot of money without the support of justice, ”said Monique Goyens, head of BEUC.
Despite the efforts of national regulators to combat misleading advertising, the problem still lacks a comprehensive approach, the report says.
The European consumer organization has proposed several measures to counter such marketing campaigns:
- stricter advertising policy and tougher enforcement;
- clear identification of risks from influential persons;
- close relationship with the European Commission on the promotion of digital assets;
- cooperation between European consumer protection authorities and supervisory authorities.
Earlier, UK regulators released a list of requirements for crypto advertising. The document asks financial influencers to consider whether they are the “right people” to promote a product.
In February, the UK Financial Conduct Authority threatened jail time for unauthorized promotion of digital assets.
Recall that in March, Belgium also outlined the rules for advertising cryptocurrencies. The local Financial Services and Markets Authority is responsible for this area.
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