Lawrence Damilola
TikTok is being scrutinized in the UK for potentially operating like a cryptocurrency exchange. According to Financial News, a compliance expert alerted the Financial Conduct Authority (FCA) regarding TikTok’s virtual currency system, TikTok Coins.
Users purchase these coins with real money to gift creators on the platform, but concerns have been raised about the possibility of converting the coins back into cash. This process mirrors cryptocurrency transactions and has drawn attention from regulatory authorities.
The expert expressed concerns about TikTok’s virtual tokens being used in ways that may involve money laundering or terrorist financing. These concerns arise as crypto businesses in the UK are subject to strict oversight, and the handling of virtual currencies by platforms like TikTok may attract similar scrutiny. The expert also raised issues about the potential security risks involving user financial data.
TikTok’s System and FCA Compliance Issues
The compliance expert’s letter indicated that TikTok’s system could classify it as a money service business under FCA guidelines. This classification would require the platform to comply with anti-money laundering (AML) and counterterrorism financing laws. The expert noted that without proper AML registration, the origin of funds used to purchase TikTok Coins remains uncertain, which could be problematic under FCA regulations.
According to the letter, TikTok’s activities, particularly its handling of virtual currency, may require it to adhere to registration and reporting duties similar to those imposed on businesses that deal with cryptocurrencies. This includes complying with regulations designed to prevent money laundering and ensuring transparency in transactions.
FCA’s Actions on Unregistered Crypto Firms
The FCA has been actively targeting unregistered crypto firms that fail to comply with financial promotion rules introduced in October of the previous year. This enforcement effort has led to over a thousand warnings issued to unregistered crypto entities. Additionally, the FCA has reported a rejection rate of 87% for crypto firms applying for licenses, indicating strict regulatory measures being enforced across the sector.
With the FCA increasing its efforts to regulate the crypto space, TikTok’s virtual currency system has come under greater scrutiny.
Read More
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Lawrence does not hold any crypto asset. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
