The European Consumer Organisation (BEUC) which happens to be the largest European consumer rights group has just accused crypto marketers in popular social networks including YouTube, Instagram, Twitter, and TikTok of misleading promotion of crypto assets, exposing consumers to “serious harm.”
Regulatory Adversities Rain Down On Crypto
It seems the cryptocurrency industry is in the thick of a pitched battle with regulatory agencies from all across the world. In the United States, the Securities and Exchange Commission (SEC) and other watchdogs like the Commodity Futures Trading Commission (CFTC) have continued to target crypto-focused companies thus harming the entire digital assets ecosystem.
Recently, the US SEC sued two of crypto’s biggest players – Binance and Coinbase under the pretext of regulatory disobedience and facilitating the sale of crypto assets as unregistered exchanges. The SEC had intensified its clampdown on the digital assets industry after the collapse of Sam Bankman-Fried’s FTX Empire.
Amidst the ongoing turmoil in the US, the European Union has also ramped up efforts to target the crypto ecosystem. The European consumer group has complained to the European Commission and consumer authorities that the online platforms allegedly facilitate the misleading promotion of crypto assets.
EU Consumer Agency Launches Attack On Crypto
On June 8, BEUC published a report titled “Hype or harm? The great social media crypto con,” citing the proliferation of misleading advertisements of crypto assets on social media platforms that exposed consumers to serious harm such as the loss of significant amounts of money. Along with the European consumer group, nine other consumer groups from Denmark, France, Greece, Italy, Lithuania, Portugal, Slovakia, and Spain joined in the complaint.
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
According to the official press release, the BEUC in its joint complaint with nine other members urged the Consumer Protection Cooperation Network to require the online platforms to adopt stricter advertising policies on crypto and take measures to prevent influencers from misleading consumers.
Furthermore, the complaint also requested European consumer authorities to cooperate with European Supervisory Authorities for financial services to ensure “the platforms adapt their advertising policies to prevent the misleading promotion of crypto.”
BEUC Director General Monique Goyens noted consumers are always looking for ways to ‘get rich quick’ citing friends, acquaintances, and social media influencers as key motivations for buying crypto-assets. However, in most cases, these claims are too good to be true and consumers are at a high risk of losing a lot of money without recourse to justice. Goyens added,
“This is why we are turning to the authorities in charge of protecting consumers to ensure Instagram, YouTube, TikTok, and Twitter fulfill their duty to protect consumers against crypto scams and false promises.”
Uncontrolled Regulation Will Choke The Crypto Industry
Regulatory authorities worldwide have been targeting crypto advertisements on media platforms for a long time. Last year, the Advertising Standards Authority, United Kingdom’s advertising watchdog, sent enforcement notices to over 50 cryptocurrency companies as part of a regulatory crackdown on crypto-focused ads, threatening the firms with targeted sanctions if they don’t stop promoting digital assets.
Similarly, in December 2022, the United States Federal Trade Commission (FTC), United States consumer watchdog, launched an attack on several crypto firms over possible deceptive or misleading advertisements relating to cryptocurrencies in the country.
Such enforcement waves have caused outrage and anxiety in the crypto industry, triggering a volatile phase in the entire digital asset ecosystem. These episodes have also caused significant disruption in the cryptocurrency industry, with numerous crypto companies struggling to operate under such stringent rules, resulting in brutal cost-cutting.
We at Crypto-Economy believe excessive regulation will stifle innovation and limit the growth of this emerging asset class. Thus, the key will be to strike a balance between regulation and innovation, ensuring that immoderate red tape and bureaucracy do not suffocate the cryptocurrency sector’s growth.
