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EU Watchdog Calls Out Social Media, Elon Musk And ‘Finfluencers’ For ‘Crypto Con’

A report from the European Consumer Organization calls out social media platforms for letting cryptocurrency ads avoid regulations

A 20-page report from the European Consumer Organization (ECO) is scrutinizing social media platforms for allowing cryptocurrency advertisements to bypass regulations.

The organization, which represents 46 consumer groups from 32 European countries, highlighted the inadequate awareness among consumers regarding the perils entwined with cryptocurrencies on platforms like Facebook, which otherwise prohibit the endorsement of unlicensed financial services.

“TikTok, Instagram, Twitter and YouTube are culpable for the proliferation of deceptive crypto advertisements through sponsored content and influencers,” the report, released on Jun. 8, states. “This constitutes an unjust trade practice, subjecting consumers to substantial detriment, including the potential loss of significant capital.”

In this photo illustration, the Elon Musk’s twitter account seen displayed on a mobile phone screen with a Dogecoin logo in the background. (Photo Illustration by Idrees Abbas/SOPA Images/LightRocket via Getty Images)

The report, titled “Hype or Harm? The Great Social Media Crypto Con,” makes a particular reference to Twitter, highlighting how Elon Musk’s association with Dogecoin (CRYPTO: DOGE) contradicts Twitter’s own embargo on cryptocurrency ads.

It also shines a light on the emergence of “finfluencers,” or financial influencers, whom the report considers to be a vital conduit of information, especially for the younger demographic.

While national regulators have been striving to stem the tide of misleading crypto promotions, the report argues that a multifaceted strategy is direly needed.

It asserts that the European Union has the legal groundwork, through the Unfair Commercial Practices Directive, and the institutional framework, via the Consumer Protection Cooperation Network (CPCN), to implement EU-wide actions.

The BEUC’s report advocates for the CPCN to exert pressure on social media companies to enforce stringent criteria in their ad policies.

This encompasses a ban on influencers promoting cryptocurrency offerings and mandates periodic submissions of reports to the European Commission detailing the efficacy of the implemented measures.

Illustration: Instagram, Suqian City, Jiangsu Province, China, 21 May 2023. Instagram, the photo social network owned by Meta, plans to launch a text-based App that will compete with Twitter, (Photo credit should read CFOTO/Future Publishing via Getty Images)

In a contrasting development, the French Senate has recently permitted crypto enterprises with official registration to engage social media influencers for marketing and publicity campaigns.

This juxtaposition of events underscores the multifaceted and evolving nature of cryptocurrency regulation, especially in the context of advertising and consumer protection, within Europe and beyond.

Produced in association with Benzinga

Edited by Jessi Rexroad Shull and Alberto Arellano

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