The largest European consumer rights group, the European Consumer Organisation (BEUC), has filed a complaint with the European Commission, alleging that popular social media networks are engaging in the misleading promotion of cryptocurrencies.
In their report titled “Hype or harm? The great social media crypto con,” BEUC, claims that consumers are not adequately informed about the risks associated with crypto investments.
BEUC’s report, spanning 20 pages, specifically highlights the role of Instagram, YouTube, Twitter, and TikTok as “key players” in crypto advertising. It criticizes these platforms for allowing misleading advertisements and influencers to promote cryptocurrencies, which exposes consumers to significant financial harm.
The report points out a case involving Facebook, stating that crypto ads bypass rules prohibiting the promotion of non-licensed financial platforms. Additionally, BEUC highlights Twitter’s violation of its policy by allowing Elon Musk to endorse Dogecoin, a cryptocurrency, using the platform. The report also emphasizes the influence of “influencers” on younger audiences, labeling them an important information sources.
Although individual national regulators have attempted to combat misleading promotion, the report argues that a comprehensive approach is necessary. It suggests that the Unfair Commercial Practices Directive (UCPD) provides a legal basis for the European Union (EU) to take action. The EU Consumer Protection Cooperation Network (CPC Network) is identified as the appropriate body to lead enforcement efforts targeting social media platforms used for crypto asset promotion.
Meanwhile, in France, the Senate has recently approved an amendment that permits registered crypto companies to engage social media influencers for advertising and promotional purposes. This decision marks a contrasting approach to the issue compared to the concerns raised by BEUC and the need for tighter regulation.
As the debate around crypto advertising intensifies, consumer protection organizations and regulatory bodies are grappling with the responsibility of social media platforms to ensure accurate and transparent promotion. The outcome of these discussions will likely shape the future of crypto advertising and its impact on consumer welfare within the European Union.