Technology companies and social media platforms such as Meta, Alphabet, Twitter and TikTok are facing regulatory action after the European consumer watchdog complained to the European Commission and consumer authorities, accusing the platforms of facilitating the misleading promotion of crypto assets.
US regulators suing crypto platforms Binance and Coinbase, along with the collapse of FTX last year, have raised consumer protection concerns related to crypto assets like Bitcoin and ether.
Last month, the European Union adopted the world’s first comprehensive set of rules to regulate crypto-assets (MiCa).
The proliferation of misleading advertisements for crypto assets on social media platforms is an unfair business practice because it exposes consumers to serious harms such as the loss of large sums of money, the European Consumer Protection Organization said in its complaint, filed Thursday in collaboration with nine of its members.
It urged the organization to require platforms to adopt stricter advertising policies on encryption and take measures to prevent influencers from misleading consumers.
The group called on European consumer authorities to cooperate with European supervisory authorities for financial services to ensure that platforms adapt their advertising policies to prevent misleading promotion of cryptocurrencies.
“Cryptocurrencies will soon be regulated by the new Market in Crypto Asset Regulation, but this legislation does not apply to social media companies that benefit from advertising cryptocurrencies at the expense of consumers,” Monique Gouwens, Director General of the European Consumer Protection Organization, said in a statement.
“This is why we turn to consumer protection authorities to ensure that Instagram, YouTube, TikTok and Twitter fulfill their duty to protect consumers from cryptocurrency scams and false promises,” she said.
Consumer groups in Denmark, France, Greece, Italy, Lithuania, Portugal, Slovakia and Spain signed up to the complaint.