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China's video-sharing social media platform TikTok has prohibited influencers from promoting various ads including Virtual Currencies/Cryptocurrencies, Cryptocurrency Trading Platform, Cryptocurrency Wallets, Initial Coin Offering, Token Sale, Cryptocurrency Debit or Credit Card, Cryptocurrency Advisory services, and other means of promotion or advertisement of digital currency or token starting July 2021.
According to TikTok Brand Content Policy Page, these practices are globally prohibited on their platform if the content contains a paid advertisement. TikTok ensures that these policies will create a safe and secure environment for their users.
The policy only extends to those users (TikTok Users) who receives something of value (e.g. a form of gift, money, commissions from purchase, and commercial relationship like a brand ambassador) from a third party to promote and advertise the brand's product or services in the user post's to grow their reach. This policy doesn't cover the promotion, advertising, and discussion of cryptocurrencies for free which will benefit the scallywags who invite other users for shilling and scam tokens.
Why TikTok decided to go this far?
©Image by depositphotos.com
The big social media has a billion worth of content on its platform, including Cryptocurrency and Investing related hashtags# gaining over 2.8 Million views and comments. Because of this, TikTok is a driving force in the recent rise of Bitcoin, Dogecoin, Shibu (Shib Coin), and other altcoins. Crypto-based companies are also joining the trend by paying influencers (also called "FinTok" advisers) to advertise their products and service. Other self-proclaim crypto experts are also joining the bandwagon by giving advice and promotion to click their referral links and earn a small profit from it. Sometimes, the result of giving unregulated and terrible advice about investing in crypto assets can affect the image of the platform and influences young investors for misleading information.
According to Amy Austin of Financial Times, "TikTok tighten its policy after some individuals were warned against taking financial information and advice on its platform over concerns it could be misleading, fraud, or scam particularly for the motivated young who, without proper understanding of the market, or a naive investors who's planning to take a huge financial risk in order to grow their money quickly - which is a big loss".
A TikTok User also voices out his opinion regarding the policy. Errol Coleman, a FinTok Advisor with 260,000 plus followers stated that TikTok is monitoring this problem. He agreed to the recent news that TikTok propelled its policy due to some promotion of possibly scam tokens of large esports organizations. He also added that many accounts are promoting questionable cryptocurrency and other investments.
Some examples are:
(1) Adyn Schachtel, a self-proclaimed crypto analyst with 220,000 plus followers. Last May 5th, 2021, he posted a video predicting that the Dogecoin price will hit $3,000 in less than few months. But, Dogecoin has not surpassed even $0.74 that month.
Source: https://twitter.com/i/status/1389670542215680001
On May 31st, 2021, he posted another video claiming Dogecoin's price is projected to reach $4 or even surpass Ethereum based on his analytics team.
Source: https://twitter.com/i/status/1399202857237241861
(2) Maren Altman, a crypto astrologist with 1Million plus followers. Using a horoscope, she believes that the planetary alignment is the key for predicting Bitcoin's future price.
Source: https://twitter.com/i/status/1351218149446791168
(3) Sebastian Wang (@masterbaz) with 200,000 followers posted a video about a man trading a physical Bitcoin Coin to a Dogecoin Coin. This kind of video might misinterpret by some of his viewers especially those newcomers in crypto.
Source: https://www.tiktok.com/@masterbaz/video/6969972348497825029
(4) rashadd.robinson with 600 plus followers posted a video promoting Floyd Coin. According to Cointelegraph, someone has created a George Floyd token to take advantage of the anti-racism sentiment and civil turmoil in the United States.
Source: https://www.tiktok.com/@rashadd.robinson/video/6956597797218995462
(5) superhexwin with 22,000 followers recommends buying HEX as a way to get rich. His claim is based on the people who bought bitcoin and Ethereum early are apparently now extremely wealthy.
Source: https://www.tiktok.com/@superhexwin/video/6930153515054550277
There is plenty of branded content on TikTok which is handled by poorly informed influencers which caused TikTok to take any action on this problem.
Is China behind this move?
We all know that Chinese authorities have expanded their laws regarding the banning of trading and mining of volatile cryptocurrencies. This policy started last May 2021 where major cryptocurrency mining warehouses were forced to shut down and move out in mainland China which causes the recent slump in the crypto market.
©Image by dw.com
Since TikTok is under the laws of China, we can say that they are just following their bylaws.
What's Good About this Policy?
The Good thing about this policy are:
- TikTok can now create videos on how to make financial decisions and understand financial terminologies.
- TikTok can lessen the number of people who are getting involved in a high-risk investment and misinformation.
- TikTok can help its current and future users to become more confident and alert in some financial misinformation or frauds.
What's Bad About this Policy?
TikTok new policy doesn’t really crackdown the main problem:
- There are comments in some TikTok videos about encouraging people to invests in a certain coin or platform that will make them instant millionaires. These get-rich schemes are also seen on other social media platforms. This type of user is everywhere, even if you try to report it, many will still sprout with a different account.
- This ban doesn’t concern small-time influencers, the policy only stated that the ban only extends to those users with direct commercial relationships to the third party. Meaning, these influencers can still spread misinformation and promotion about a certain coin or platform.
- This policy might affect legitimate commercial parties who are licensed by their respective countries.
- This can affect the performance of some cryptocurrency prices in the market.
