Social media platforms such as Instagram, YouTube, TikTok, and Twitter may face stricter regulations for cryptocurrency advertising. European consumer group BEUC has filed a complaint with the European Commission and consumer authorities over the misleading promotion of digital currencies such as bitcoin and ether on online platforms.
BEUC argued in the indictment that posting misleading advertisements for cryptocurrencies on social media platforms is an unfair business practice. It exposes consumers to serious damages, such as losing large sums of money. In addition to advertising, according to the consumer group, this is also caused by misleading messages from social media influencers.
The consumer group European Consumer Protection Cooperation Network wants to act against the social media companies. The cooperation body of national regulators should demand a stricter advertising policy for cryptocurrencies on social media, to prevent scams by influencers, for example. The European consumer authority should also work with European regulators for financial services to ensure that platforms actually adjust their advertising policies in relation to crypto.
Last month, the European Union passed the so-called Markets in Crypto Assets Act (MiCa), a law that includes stricter rules for cryptocurrencies. However, according to BEUC Director Monique Gouwens, this law does not apply to social media companies that profit from cryptocurrency advertising at the expense of consumers. Consumer organizations in Denmark, France, Greece, Italy, Lithuania, Portugal, Slovakia and Spain have joined the complaint.
Britain’s financial watchdog (FCA) announced Thursday that from October 8, advertisements for crypto products or services in the UK must include a clear risk warning that consumers “should not expect protection if something goes wrong and they could lose all their invested funds.” . Companies should also implement a cooling-off period for consumers who invest in cryptocurrencies for the first time.
The steps follow the collapse of cryptocurrency exchange FTX last year. Also, this week the US Securities and Exchange Commission (SEC) sued cryptocurrency exchanges Coinbase and Binance for violating the exchange’s trading rules and misleading investors and regulators.
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