The very popular TikTok application has updated its branding policy and banned the promotion of financial services.
The social network TikTok has taken a step towards not only a ban on crypto influencers on its platform, but also all creators promoting financial services, according to the Daily Mail. The ban includes, but is not limited to, cryptocurrencies, loans, credit cards and Forex companies.
TikTok banned the promotion of cryptocurrencies
According to the report, this step is directly aimed at stopping the worrying trend of high-risk investments offered on social networks. Many of these high-risk investments are nothing but various scams. As a result of this ban, legitimate financial firms will also be affected, which will no longer be able to use influencers in the same way as now.
Influencers generally pay a flat fee or commission for praising certain coins, exchanges, dApps or other related products. The advertising policies state that financial services companies may advertise to targeted users over the age of 18. However, ads for digital assets and cryptocurrencies are already banned on the platform.
As many cryptocurrency companies use influencers on TikTok, known as “Fintok” consultants, to expand their global reach, these new rules will have a major impact on the sector itself.
TikTok under fire for unregulated financial advice
The main reason for this decision by TikTok is the recent criticism that the company has faced for irresponsible approval of misleading financial advice. The cause for concern is that young investors who are unfamiliar may grab these tips to get rich quick and get into serious financial trouble.
Some of the fintok influencers published things that were seemingly harmless and suggested buying stocks that were growing and then selling them when they began to fall. So far, others have promised to make you a millionaire in just one month or sell online investment rates for tens of thousands of dollars.
According to a February report by the British Financial Conduct Authority (FCA), TikTok was used to target young and naive investors who want to make money quickly.
The FCA report states: “The findings show that a higher, younger and more diverse group of consumers is involved in higher risk investments, which may be partly due to the approach offered by new investment applications.” that the loss of their investment would have a “major impact on their future lifestyles”.