Popular social media platform TikTok started a crackdown on promoters of financial services products such as share trading, buy now pay later, and cryptocurrencies.
According to the new update, the platform wants to stop the growing surge of frauds and unsuitable high-risk investments on social media.
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However, the new crackdown will also have a direct impact on financial firms that are doing genuine business.
The new rule is necessary to reduce fraud
Fintechs and banks have intensified their interests to partner with influencers on TikTok to advertise their services. Specifically, Revolut and Monzo have been very active on the social media platform. also, the popularity of the Plum content and savings app is growing due to the promotional activities of influencers on TikTok.
However, the new rule is going to cut down these activities on the platform. The report on the rule stated that it aims to stop the increasing menace posed by high-risk investment activities on Social media.
The platform says that most of these activities do not promote any tangible thing but only schemes, scams, and frauds. The platform noted that it has necessitated a ban on most of its activities, which may also affect legitimate financial firms. TikTok still keeps the option of advertising on their platform. But this time, the platform will be cutting off influencers, which is the real issue.
Influencers are usually paid a fixed fee for their endorsement of certain dApps, exchanges, coins, and related products.
A massive impact on the industry
Based on the ad policy, financial services firms can advertise to targeted users who are over 18. But ads from cryptocurrencies and digital assets are no longer allowed on the platform.
Many companies doing crypto-related businesses use influencers to reach users and expand their brands. With this new rule, it will be a massive impact on the industry. Without the ability to pay TikTok for advertising or pay influencers, the days of cryptos on the platform are numbered.
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