EU concerned about crypto advertising on social media

The European consumer organisation BEUC published a report highlighting misleading cryptocurrency advertising on popular social networks.

Today BEUC & consumer groups in 8 countries are taking action against TikTok, Instagram, Twitter & YouTube for facilitating the misleading promotion of crypto assets on social media ?. We’ve filed a complaint with @EU_Commission and consumer authorities: https://t.co/b6NYsBl4VM pic.twitter.com/w5iLMy4h1i

— The Consumer Voice (@beuc) June 8, 2023

BEUC noted that Instagram, YouTube, Twitter, Facebook and TikTok are “key players” in the promotion of digital assets. In the organisation’s view, users are not fully aware of the risks associated with them.

According to the report, advertisers on Facebook circumvent rules banning the promotion of unlicensed financial platforms.

«Due to their high volatility and speculative nature, digital assets remain a very risky investment product, not suitable for many consumers. Unlike traditional investments, cryptocurrency is not backed by tangible assets and is largely based on speculation, which makes it highly unstable,» the organisation said.

Regarding Twitter, representatives noted Elon Musk changing the classic logo of the social network to the mascot Dogecoin, which sent the coin’s price up by almost 25%. Meanwhile, the platform’s policy prohibits any advertising of cryptocurrencies.

BEUC representatives also drew attention to so-called “finfluencers”, who are an “important source of information” for a younger audience.

«Influencers on social media are increasingly promising consumers to “get rich quickly”. Unfortunately, in most cases these claims are too good to be true, and investors risk losing a lot of money without justice support», said BEUC chief Monique Goyens.

Despite efforts by national regulators to combat misleading advertising, the problem still lacks a comprehensive approach, the report says.

BEUC proposed several measures to counter such marketing campaigns:

• A stricter advertising policy and tougher enforcement;
• Clear risk disclosures by influencers;
• Closer coordination with the European Commission on the promotion of digital assets;
• Cooperation between European consumer protection authorities and supervisory authorities.

Earlier, UK regulators issued a list of requirements for crypto advertising. The document asks ‘finfluencers’ to consider whether they are the ‘right people’ to promote the product.

In February, the UK’s Financial Conduct Authority threatened with prison terms for unauthorized promotion of digital assets.

In March, Belgium also outlined the rules for cryptocurrency advertising. The local Financial Services and Markets Authority is responsible for this.