Amid the increasing scrutiny of crypto marketing practices across the globe, a European regulator has published a report on the increasing threats. The European Consumer Organisation (BEUC) has flagged key concern areas in the field of crypto advertising.
On Thursday, the European Consumer Organisation (BEUC), published a report titled “Hype or harm? The Great Social Media Crypto Con.“ The European Consumer Organisation is an umbrella consumers’ group, founded in 1962. Based in Brussels, Belgium, it brings together 45 European consumer organizations from 32 countries.
In the 20-page document, the group states that consumers are not fully aware of the risks associated with crypto. Further, it drew attention to Instagram, YouTube, Twitter and TikTok and called them “key players” in crypto advertising.
Referring to the case of Facebook, the BEUC highlighted that crypto advertisements skirt rules, forbidding the promotion of non-licensed financial platforms. The announcement cited TikTok, Instagram and YouTube to be responsible for allowing influencers to promote misleading crypto advertisements. It stated:
TikTok, Instagram, Twitter & YouTube are responsible for allowing misleading advertisements of crypto to multiply through ads & influencers. This is an unfair commercial practice, exposing consumers to serious harm (loss of significant amounts of money).
Further, targeting Twitter, the report highlighted Elon Musk’s move to use Dogecoin despite the platform’s own prohibition of crypto advertisements. The BEUC also mentions so-called “finfluencers” as “an important source of information” for a younger audience. Experts highlight that despite efforts of national regulators to combat misleading promotion, the problem still lacks a complex approach.
According to the report, a legal base already exists to take European Union-level measures called the Unfair Commercial Practices Directive and a body to lead the enforcement called the Consumer Protection Cooperation Network (CPCN). However, this hasn’t addressed the problems that have arisen to threaten the industry. Quoting the report:
The problem continues to be addressed at national level mainly while it would require a common approach by the CPC Network acting collectively on the basis of the UCPD and targeting the platforms used for the promotion of crypto assets and related services.
Further, the report calls for the CPCN to request social media applications to implement stricter conditions in their advertising policies. Amid the suggested measures, the report included prohibition for influencers to promote crypto products in their terms of use, and requirements to submit reports to the European Commission about the effectiveness of the measures put in place.
In terms of individual nations, some European nations have already taken steps to combat the increasing threat from misleading marketing practices. One of such nations is Belgium, whose regulator has prioritized areas of focus in their upcoming regulatory standards for crypto advertisements.
Notably, the increasing global focus on the need for enhanced regulation and monitoring of crypto advertisement and marketing practices highlight the growing recognition of the importance of investor protection and the prevention of financial fraud. Recently, the UK’s Financial Conduct Authority (FCA) has introduced stringent regulations for crypto advertising to safeguard individuals from scams and excessively risky investments.
Additionally, the FCA has partnered with influencers to launch a joint campaign intending to promote safe financial products and educating the public about the potential risks associated with crypto assets. With the increasing global efforts, these events will help in establishing the crypto industry as a safer and more reliable space.