Instagram, YouTube, TikTok and Twitter the 4 major social media platforms could face regulatory action, after EU consumer group BEUC an umbrella group for 46 independent consumer organizations from 32 countries, has filed a complaint to EU Commission and consumer authorities that the crypto platforms allegedly facilitate the misleading advertisement of crypto assets.
Complaint against major platforms
The complaint specifically names Twitter, Instagram, TikTok, and YouTube.
U.S. regulators suing crypto platforms Coinbase and Binance, along with last year’s collapse of FTX, have sparked concerns over consumer protection related to crypto assets such as bitcoin and ether.
The European Union last month adopted the world’s first comprehensive set of rules for cryptoasset regulation (MiCa).
BEUC in its complaint filed on Thursday said the proliferation of misleading social media crypto ads on the social media platforms is an unfair commercial practice as it exposes consumers to serious harm such as the loss of significant amounts of money.
For example, some ads have claimed that crypto investments are “guaranteed” to make money or are “low-risk.”
It said this was happening through advertising and influencers.
It urged the Consumer Protection Cooperation Network to require the online platforms to adopt stricter advertising policies on crypto and take measures to prevent influencers from misleading consumers.
Last month, the EU adopted the world’s first comprehensive set of rules for crypto asset regulation (MiCa).
The Network should subsequently inform the European Commission about the effectiveness of these measures, BEUC said in its joint complaint with 9 of its members.
The move comes after the US authorities said they would sue trading platforms Coinbase and Binance, raising concerns over consumer safety regarding crypto assets.
In France, the Senate passed an amendment permitting registered crypto companies to hire social media influencers for advertising and promotional purposes.
“Crypto will be regulated soon with the new Market in Crypto Assets Regulation but this legislation does not apply to the social media companies benefiting from the advertising of crypto at the expense of consumers,” BEUC Director General Monique Goyens said in a statement.
“This is why we are turning to the authorities in charge of protecting consumers to ensure Instagram, YouTube, TikTok and Twitter fulfil their duty to protect consumers against crypto scams and false promises,” she said.
Consumer groups in Denmark, France, Greece, Italy, Lithuania, Portugal, Slovakia and Spain have also signed up to the complaint.
The group called on European consumer authorities to cooperate with European Supervisory Authorities for financial services to ensure the platforms adapt their advertising policies to prevent the misleading promotion of crypto.
Protective measures
If the EU Commission takes action against the social media platforms, it could mean that these platforms will be required to do more to protect consumers from misleading crypto ads. This could include taking steps such as:
- Misleading crypto ads to be removed.
- Crypto companies to provide more information about their products and services in their ads
- Consumers allowed to report misleading crypto ads
What does this mean for consumers?
If considering investing in crypto, it is important to do research and to be aware of the risks involved. Always be skeptical of any investment that promises high returns with little or no risk.
