The European Consumer Organization (BEUC) has filed a complaint with the European Commission and consumer authorities against Instagram, YouTube, TikTok, and Twitter, for facilitating 'misleading' promotion of cryptocurrencies.
In a report dubbed 'Hype or harm? The great social media crypto con', BEUC blamed the social media platforms for promoting cryptocurrencies using advertisements and influencers in what it termed 'unfair commercial practice' that exposes investors to potential losses.
Call to Tighten Crypto Regulations
The complaint follows lawsuits against top cryptocurrency exchanges, Coinbase and Binance, by the US financial regulators and the collapse of FTX in November last year. The losses suffered by investors from the collapse of the Bahamas-based derivatives exchange is pushing the regulators to rethink how to protect investors.
"Consumers are increasingly being promised 'get rich quick' investments by ads and influencers on social media," BEUC's Director General, Monique Goyens, said in the statement. "Unfortunately, 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."
BEUC is asking that the network of authorities mandated with enforcing EU consumer protection laws, the Consumer Protection Cooperation Network, compel social media platforms to impose strict rules on the advertisement of digital assets. In addition, the European consumer group is pushing for the adoption of measures to prevent influencers from misleading the public about digital assets on social media. It also wants an assessment by the European Commission on the effectiveness of consumer protection on social media.
Moreover, BEUC emphasized the need for cooperation between the consumer groups in Europe and the European Supervisory Authorities to ensure their policies effectively protect consumers against misleading promotions of digital assets.
The State of EU’s Crypto Rules
According to BEUC, neither the recently adopted European Union's Markets in Crypto-Assets (MiCA) regulation nor the Digital Services Act (DSA), a separate regulation on illegal social media content, protects consumers. The EU passed MiCA in April as one of the most significant pieces of legislation in the digital asset space.
"Crypto will be regulated soon with the new Market in Crypto Assets Regulation, but this legislation does not apply to the social media companies benefiting from the advertising of crypto at the expense of consumers," Goyens noted. "That is why we are turning to the authorities in charge of protecting consumers to ensure Instagram, YouTube, TikTok and Twitter fulfil their duty to protect consumers against crypto scams and false promises."
BEUC's complaint was filed with the support of consumer groups in Denmark, France, Italy, Greece, Lithuania, Portugal, Slovakia, and Spain.
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This article was written by Jared Kirui at www.financemagnates.com.
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