TikTok, a popular social media and short video-sharing app became an investigational target for the United Kingdom crypto regulatory authorities following accusations that the platform operates like an exchange. For context, the video-sharing app has its native token, called TikTok Coins.
The app users can trade the coins for fiat currencies like in most crypto exchanges. Interestingly, users purchase these TikTok Coins, which they could send to content creators as virtual gifts. Subsequently, they convert the digital gifts into cash-withdrawable diamonds.
While most trading platforms are under tight scrutiny following strict regulations, TikTok’s reward system remained unregulated. Hence, it justifies the sudden outburst in a letter to the UK’s Financial Conduct Authority (FCA).
TikTok Could Pose as an Avenue for Financial Crimes
Like every crypto exchange, TikTok's involvement in trading virtual currencies qualifies the platform as a high-risk avenue for financial crimes. Consequently, TikTok could become a breeding ground for money laundering and terrorism financing.
Aside from the monetary embezzlement concerns, users risk losing their personal and financial data. They are also vulnerable targets for fraudulent activities with malicious actors that would access the information.
FCA’s Recommendations
Having recognized the video-sharing app as a digital financial assets transaction firm, the FCA deems it liable to face the jurisdiction of cryptocurrency regulatory bodies. Therefore, the UK authorities must regulate it under the anti-money laundering and terrorist financing law acts.
Implementing the recommendations implies that Tiktok will become answerable to counterterrorism laws and should always make appropriate and detailed statements for internal and external activities.
Meanwhile, considering the new financial promotion rules drafted in October last year, the FCA has ensured that cryptocurrency platforms without operating licenses exit the UK digital marketplace. Should TikTok fail to respond to the allegations appropriately and satisfactorily, chances abound that the UK might ban its operations in the European nation.
