TikTok has announced that there are new guidelines in place for the type of content allowed on their platform. Starting now, users will not be able to post any promotional posts about financial products even if they live outside the US.
The article from FT Adviser states that TikTok's branded content policy had already prohibited promotion of all financial services and products but was updated this week specifically targeting crypto-based promotions as well because it is such a hot topic right now with many companies looking into blockchain technology as an avenue for potential revenue streams or cutting costs while still being compliant."
Tik Tok recently made changes to its rules prohibiting certain types of ads including those promoting finance related topics regardless if they're inside or out side America.
TikTok was a hotbed for Dogecoin (DOGE) hype in 2020, when users shared related videos in an effort to get more folks to jump on the bandwagon. Other social media sites have also hosted notable financial markets discussion in recent months, with stock discussions on Reddit becoming prominent as well.
The company announced they were clamping down on “directly or indirectly sponsored content” which led some commenters at FT Adviser to speculate that it would lead people away from trading platforms and instead focus their finances elsewhere—likely due to concerns about how TikTok will handle paid posts after these changes take effect.
Effects on Influencers
Influencers are using TikTok to advertise their coins, exchanges and dApps. However, they're not allowed from advertising digital assets and cryptos on the platform. This is because influencer ads for these products can be targeted at people under 18 years of age in some countries like Japan where children cannot legally trade stocks or cryptocurrencies until they turn 20-years old.
The ability to advertise on TikTok is still an option for some companies as the real issue lies with influencers themselves - Influencers are generally paid a flat fee or commission per endorsement related product such as cryptocurrency wallets that allow access to buy various crypto currencies through devices mobile phones (Tik Tok). The ad policy states that financial services companies are allowed target specific users over eighteen, but ads for digital assets and cryptos are already prohibited from buying ads on the platform.
Cause for TikTok Crypto Ban
The main cause for this ban is irresponsibly allowing misleading financial advice to be distributed. Young investors who don't know any better can get caught up in these get-rich quick types of schemes and end up in serious debt.
A few posts by TikTok influencers are seemingly harmless; one suggested buying a stock as it's rising then selling when they begin to dip while others promise that you'll make $1M within 30 days or sell online investment courses for tens of thousands of dollars without explaining how this would work out financially on your part first - which is wrong since investing isn't guaranteed nor easy money!
With this move TikTok joins tech gaints like Google who has banned crypto advertisements in 2018, although it did remove part of that ban this year for some entities, pending certain requirements.
The crypto world continues to face lot of backlash and this ban from TikTok is yet another example of that. If you think there are better ways to regulate Crypto Ads, share your thoughts in comments section below.