Instagram, YouTube, TikTok, and Twitter face potential regulatory action in the European Union following a complaint filed by the European consumer group BEUC.
As reported by Reuters, the complaint alleges that these social media platforms facilitate the misleading promotion of crypto assets, putting consumers at risk of financial harm.
Top Platforms Allegedly Promoted Misleading Crypto Ads
BEUC argues that the proliferation of misleading advertisements and influencer endorsements of crypto assets on these platforms is an unfair commercial practice.
The complaint comes in the wake of increased scrutiny of the cryptocurrency industry, with U.S. regulators taking legal action against Coinbase and Binance, as well as the collapse of FTX last year.
These events have raised concerns about consumer protection and the need for stricter regulations to safeguard investors.
In response to these concerns, the European Union recently adopted the world's first comprehensive set of rules for crypto asset regulation, known as MiCa.
However, BEUC argues that the legislation does not apply to social media companies that benefit from advertising crypto assets to consumers.
Pushing for Stricter Ad Policies for Crypto
BEUC's complaint urges the Consumer Protection Cooperation Network to compel the online platforms to adopt stricter advertising policies for crypto and take measures to prevent influencers from misleading consumers.
The group also calls European consumer authorities to collaborate with European Supervisory Authorities for financial services to ensure the platforms adjust their advertising policies to prevent the misleading promotion of crypto assets.
Monique Goyens, Director General of BEUC, emphasized the need for consumer protection against crypto scams and false promises.
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She stated that consumers are increasingly being lured into risky investments through ads and influencers on social media, which often turn out to be too good to be true.
Goyens highlighted the importance of holding Instagram, YouTube, TikTok, and Twitter accountable for promoting crypto assets and protecting consumers from potential financial losses.
Widespread Consumer Concerns
The complaint filed by BEUC includes support from consumer groups in Denmark, France, Greece, Italy, Lithuania, Portugal, Slovakia, and Spain, signifying a widespread concern among European consumer organizations regarding the misleading promotion of crypto assets on social media.
Crypto assets have gained significant popularity across the European Union in recent years, with a notable percentage of consumers owning or having owned crypto assets in countries such as the Netherlands and Slovenia.
However, crypto assets' highly volatile and speculative nature and the risk of scams and unfair practices have raised concerns about consumer vulnerability.
BEUC's report, "Hype or harm? The great social media crypto con," provides substantial evidence of the misleading promotion of crypto assets on Instagram, YouTube, TikTok, and Twitter, violating the platforms' advertising policies.
The outcome of the complaint filed by BEUC will be closely monitored, as it could lead to stricter regulations and increased consumer protection measures in crypto asset promotion on social media platforms.
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