Everything seems like its fair game on TikTok. Users upload trending dances, comedy skits, lengthy monologues on life, and everything in between.
While TikTok promotes a lot of creative freedom, it has recently changed its guidelines on financial content. The app prohibits users from promoting any financial product or service. The platform also does not allow ads relating to financial services and includes cryptocurrencies in this ban.
What Led to the TikTok Ban on Crypto & Other Financial Topics
TikTok is known for its ability to appeal to certain niches. For example, dog lovers can find a haven on #DogTok, while Taylor Swift fans can find like-minded individuals on #SwiftTok.
Before the TikTok ban on financial content went into effect, stock pickers, crypto traders, and other financial investors found solace on #FinTok or #StockTok.
There were multiple parts to this side of the social media app. At its best, well-meaning experts guided users who wanted to learn about various financial topics. They would teach them how to set up a 401k account, improve their credit score, and mitigate debt. At the end of the day, these experts clarified that their guidance was only educational information and not surefire advice.
At #FinTok’s worst, things got very ugly. Greedy individuals would prey on new, hopeful investors with limited knowledge of financial topics. They would spread scams, myths, and highly misleading information on financial topics.
Examples of TikTok Scams Relating to Crypto
We’d like to present you with two crypto-related TikTok scams to demonstrate how dangerous they were.
The first one was initiated by a TikTok user named Dre in the first half of 2021. He created a “joke” coin and fittingly named it SCAM (to make it even worse, it stands for Simple Cool Automatic Money). Dre was open about his intentions with it from the beginning. He understood that the coin had no real utility, and he created it to make fun of other cryptos that are blatant pump-and-dump schemes. Despite Dre’s transparency, many people bought the coin based on the name and hype alone. It reached a peak market capitalization of $70 million and caused a lot of people to lose a significant amount when the market cap dropped to around $2.5 million.
The second scam was one with much more direct intentions. A user named James Galante released a video back in mid-2020 where he promoted the cryptocurrency Dogecoin. He told his followers to tell everyone they know about Dogecoin and rallied them with phrases like “Let’s all get rich.” It was videos like these that fueled Dogecoin’s rise in price from $0.0023 to $0.0046 in early July 2020.
TikTok Updates Its Branded Content Policies
In early July 2021, TikTok revised its branded content policy to prohibit promoting financial products, including Bitcoin, Ethereum, and other cryptocurrencies. It can be easy to think that TikTok is signaling out cryptocurrencies because of their rising popularity in modern culture. But this misunderstanding is far from the truth.
The TikTok ban extends to the promotion of:
• Pyramid schemes
• Buy now pay later (BNPL) services
• Debit and prepayment cards
• Investment services
• FOREX trading
• Bail bonds
• Get-rich-quick schemes
• Penny auctions
• Debt consolidation services
The main target of this TikTok ban is financial influencers with large followings. However, the regulations also apply to smaller creators.
Why Is TikTok Prohibiting Promotional Crypto Posts?
Critics have put TikTok under fire recently for poor regulation of educational resources related to financial topics. The major cause for concern is inexperienced, young investors who rely on the platform for financial information. These overzealous individuals have gotten caught up in get-rich-quick schemes and invested more than they can afford, leading to great financial ruin.
The “financial advice” touted by influencers ranged from “buy this crypto on the rise” to “purchase my millionaire-in-a-month investment course.” These influencers took advantage of their audience’s naivety for their own monetary gain. They didn’t care about what happened to their young fans with limited money to invest. As long as they walked away with a profit, they were content.
TikTok established its ban as a way to stop this kind of exploitation. The platform wanted to take responsibility and prevent poor advice from circulating to different audiences.
But I Thought Crypto Isn’t That Bad?
Some TikTok users were upset about the ban on crypto-related content. They felt it wasn’t warranted, especially compared to some of the darker topics that TikTok also prohibits, such as:
• Selling endangered animals or their body parts
• Adult entertainment and paraphernalia
• Drugs and alcohol
• Trading of human organs
Opponents of the TikTok ban on crypto argue that the new restrictions are a form of censorship. They’ll say that offering advice on crypto isn’t inherently harmful — people can make their own decisions, after all.
However, TikTok implemented the restrictions to hold itself accountable. Nearly half of the platform’s user base is under 30 years old, so it wanted to discourage people from making financial decisions based on the statements of popular influencers.
What We Can Take Away From the TikTok Ban on Crypto
Financial content is prevalent on the Internet. You can find it presented in YouTube videos, personal blogs, and financial-specific sites like NerdWallet. Sites like these don’t censor crypto-related topics, so you must digest everything you read with caution. While it’s important to educate yourself, you should always perform thorough research and evaluate your risk tolerance before you invest in any asset.
Now, this isn’t to say that financial content can’t be very valuable. In fact, it can expose you to strategies and concepts that you’ve previously never heard of. However, the creators of this content don’t know your circumstances and what’s best for you — only you do. Digest financial content with a warily open mind, and you should be in good shape.