TikTok Bans Cryptocurrency Promotion On Its Platform

Their latest branding policy has taken a definitive step towards the banning of promotional content related to crypto assets

By
Chung Yee
on
July 11, 2021
Category:
BSC News

TikTok Says No More Promotion

TikTok has banned the promotion of cryptocurrencies in a recent terms of service update that included a branded content policy change.

In their updated branded content policy TikTok states that in instances where value is exchanged for brand endorsement, partnership or other kind of promotion, promotion of any cryptocurrency or any product or services related to it is prohibited. TikTok’s ban is exclusively for paid posts. All other crypto-related content is still uploadable to the platform.

Promotion for Commission 

The popularity of TikTok, a video sharing application has risen exponentially and is now the most popular social media platform globally. It was the most downloaded application in the world both on the App Store and Google Play in the month of May, 2021 in data released by SensorTower

Many blockchain issuers see this trending platform as an opportunity to promote its token or product by engaging influencers to reach out to their audiences. While this brings attention to legitimate cryptocurrencies, it also is vulnerable to exploitation. Pump-and-dump schemes are often carried out on an audience that often has little other exposure to cryptocurrency. 

Source 

The platform had a role in the latest Dogecoin hype that saw the token touching an all time high at 68 cents before it took a sharp dive. 

The influence that social media yields cannot be underestimated. The GameStop saga is an example of how powerfully a social media platform can influence the equity market. 


Understanding the Reason Behind the Ban

Many might question the recent change in policy by TikTok as other institutions such as Google are relaxing their advertising policy when it comes to crypto related products. This policy change has a few salient points to note. First, it does not ban all contents related to crypto products or services. Secondly, even in Google’s relaxed policy, there is a need to obtain certification by meeting the requirements imposed by Google. 


Advertisement is not a neutral platform for any product or services to begin with, hence a need for stricter regulation.

TikTok stands out from the rest in terms of its demographics. It covers a younger age group that makes up a sizable portion of its users. Some users are probably exposed to the equity market for the first time on the platform, and may not appreciate the intricacies surrounding complex crypto products. 

This is compounded by the fact that the influencers sharing the content are swayed to prefer a positive narrative to its paying ‘client’. This inherent bias is not always maliciously intended, but it is enough of a concern for the platform that they have banned promoters.

Regulatory Actions

It is reassuring that institutions are taking a more responsible stance when it comes to the safety and security of its users. On the other side of the divide is regulatory intervention, which has become a focal point in many countries. 

In the United Kingdom, the government is proposing an Online Safety Bill, amongst others. The bill is a provision against financial fraud and user-generated online scams. It will demand that platforms take measures to curb fraudulent content. This does not cover situations where the paid content is not fraudulent but was negligent or reckless. 


Reflecting on TikTok’s Decision  

It is an onerous duty to impose on social media platform operators to ensure the safety and security of its users. The task that TikTok took on its own is a responsible step in the right direction. Although any decision that aims to restrict or ban a certain type of content will always impinge on some rights, such decisions must be used sparingly and when necessary. Here, the limit is drawn to apply to only paid advertisements. By restricting this content TikTok is protecting both their user base and themselves from potential damages.

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Chung Yee

Chung Yee has a legal background and has been involved in research works for the legal and compliance industry. Writing is his passion, centered on topics such as the blockchain and finance.

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