TikTok has banned branded digital currency ads on its platform. In an update to its policies, the popular social media platform prohibited branded content relating to financial services such as digital currencies, foreign exchange, forex trading, investment services and more. The ban comes at a time when a U.K. advertising regulator has labeled digital currency ads as an “absolutely crucial and priority area.”
TikTok, which has close to a billion monthly users, is one of the globally popular social media platforms. Despite locking horns with the Trump administration, it has experienced explosive growth during the lockdowns. Digital currency influencers have flocked to the platform, shilling their favorite tokens, mostly without any regard for their followers and their financial well-being. TikTok is now out to curb this.
In an update which it quietly introduced in the past week, the platform has banned users from posting any branded content promoting any of the over 15 prohibited industries. These include alcohol, contraceptive products, drug-related products, weapons, age-rated films, sexual products and political content.
It has also prohibited branded content promoting financial services, most significantly digital currencies.
TikTok has become a significant driver of market movements, usually sparked by influencers who pose as subject experts but are only shilling digital currencies for pay. Dogecoin has been one of the biggest beneficiaries. The #DogecoinTikTokChallenge, for instance, became wildly popular, with the participants urging their friends to buy Dogecoin just to pump its price. The memecoin has been known to shoot up all thanks to TikTok promotion.
Influencers have also been known to promote ‘worthless’ tokens whose sole purpose is pumping and dumping.
Martin Bamford, head of client education at Informed Choice told FT Adviser, “We see a huge amount of this branded content on TikTok, usually from poorly informed commentators, who lure in followers with promises of riches, but in reality are making their money off people signing up via affiliate links.”
While branded content is now prohibited, influencers can still shill their favorite coins as long as they don’t get paid directly for it. They could stand to gain if their shilled coin pumps without having their accounts restricted by TikTok, leaving a big loophole waiting to be exploited.
Meanwhile, the U.K. Advertising Standards Authority will be taking a keen interest in digital currency ads. Speaking to the Financial Times, Miles Lockwood, the director of complaints at the watchdog stated, “We see this [cryptocurrency ads] as an absolutely crucial and priority area for us. Where we do find problems, we will crack down hard and fast.”
Miles revealed that the regulator will be keenly monitoring digital currency ads on social media platforms and will take down any misleading or irresponsible promotions.
The ASA has already cracked down on digital currency ads in the past. In March this year, it banned an ad by U.K. exchange Coinfloor. The newspaper ad contained the phrase, “Today there is no point keeping it in the bank – the interest rates are insulting.”
According to the ASA, this ad contained misleading information and targeted pensioners, a group that was unlikely to know much about digital currencies.