Social media like Youtube, Twitter, Tiktok, and Instagram ads are under inspection for promoting misleading information related to crypto. If found to do so, they can face regulatory actions after the complaint filed by BEUC to European Commission and Consumer regulators.
The complaint highlights the prominent digital platforms stating national regulators may take stricker action against the crypto ads, marketed as captivative digital assets.
Social Media Crypto Ads Lure People
Monique Goyens, Director General of BEUC, said certain crypto ads are too good to attract innocent people, highlighting the good related to crypto. But, the hidden part aka the risk associated with it is never showcased in any case. Hence, it is an unfair commercial practice.
She also added that influencers attract people by playing crypto ads with statements like ‘become rich quickly’, and content creators portray half information in front of their followers and others to persuade them. Thus, these blind believing ads are a huge risk for the economy.
The EU announced the adoption of the world’s first crypto regulation, Markets in Crypto Assets (MiCA) which is likely to be launched by 2024. MiCA, aims to develop the European approach to encourage technological development and confirm consumer protection and financial stability.
Social Media Crypto Influencers Must Have Registration
According to the MiCA regulation, crypto influencers must be registered with regulatory bodies. This law was signed by Robert Metsola, European Parliament President and also by Peter Kullgren, Swedish Rural Affairs Minister
BEUC, in a joint statement with its nine members, have stated social media platforms providing deceptive information regarding crypto should be mandated to take preventive measures. The members in the joint statement for complaint include Denmark, Greece, Italy, France, Lithuania, Portugal, Slovakia and Spain.
Reportedly regarding crypto ads in the U.K., the regulatory measures have to be followed compulsorily from October 1st, 2023. Under this regulation, warnings related to crypto should be highlighted with ads. The 24-hour cooling off period is also to be given to consumers after buying crypto assets for decisive thinking. This rule of cooling off was first posted in October 2022, after the fall of FTX.
FCA Research Highlights Increase in Crypto Crimes
The Financial Conduct Authority (FCA) research conducted shows there is 56% of increase in ownership of crypto between 2021 and 2022. But, it also highlights a constant increase in crimes related to crypto.
As per the Federal Trade Commission (FTC), almost $770M were stolen by fraudsters using fake social media accounts in 2021.The money that was made off were linked to fake investment schemes and crypto scams.
Other incidents also include an incident in 2021, in which the scammer looted $500K through fake crypto wallets. Almost a similar incident was reported when a scammer made a fake Elon Musk account, inviting people to a scamming giveaway and stole nearly $2M.
As per FCA’s report, Instagram is the most preferred platform for scamming with an estimated 32% of scammers conducting scams relating to crypto on this platform. It is followed by Facebook, in second position with 26% of victims reporting crypto scams.
Hence, regulation is needed for crypto marketing. All social media platforms are allowed for portraying regulated crypto ads for marketing, and the regulation will involve certain rules to be followed.
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