The European Consumer Organisation (BEUC) has recently published a report titled “Hype or harm? The great social media crypto con”, which points out that consumers may not be fully aware of the risks associated with cryptocurrencies. The report specifically highlights popular platforms like Instagram, Youtube, TikTok, and Twitter as key players in cryptocurrency advertising and alleges that these platforms and their influencers are allowing misleading advertisements to expose consumers to serious harm, such as the loss of significant amounts of money.
In one example, the report calls out Facebook for allowing crypto ads that skirt around the rules prohibiting the promotion of non-licensed financial platforms. With Twitter, it notes Elon Musk promoting Dogecoin through his tweets, despite the platform’s own ban on crypto advertising. Moreover, “finfluencers” on these platforms serve as a major source of information for younger audiences, further complicating the issue.
Although national regulators have been tackling misleading promotions, the report argues that it lacks a comprehensive approach. It suggests that there is already a legal basis for taking EU-level measures, namely the Unfair Commercial Practices Directive (UCPD), and a body to lead enforcement, the EU Consumer Protection Cooperation Network (CPC Network). As such, the report calls for the CPC Network to request social media platforms to implement stricter conditions on their advertising policies and prohibit influencers from promoting crypto products.
On the other hand, France has recently approved an amendment allowing registered crypto companies to hire social media influencers for advertising and promotional purposes. This move suggests that France has a more open stance on crypto advertising, as long as the companies and influencers involved operate within the proper regulations.
To summarize, while the BEUC report raises valid concerns about the potential harm from misleading crypto ads and promotions on social media platforms, it is important to note that responsible advertising practices implemented by registered companies can still provide valuable information for people interested in the space. Putting the right regulations and safeguards in place, as well as fostering an environment that encourages transparency and education, may strike a balance to ensure consumers have the necessary information to make informed decisions about cryptocurrencies.