TikTok, the popular short video platform, is under scrutiny in the UK, with claims that it operates similarly to cryptocurrency exchanges. A compliance expert has submitted a request to the Financial Conduct Authority (FCA), suggesting that TikTok should be subject to anti-money laundering and terrorism financing checks. According to Financial News, TikTok’s “virtual” token program allows funds to be indirectly converted into real money, raising regulatory concerns.
TikTok’s Coins Resemble Crypto Exchange Operations
The core of this scrutiny revolves around TikTok’s in-platform coin system, where users can purchase TikTok Coins with real money and use them as gifts during live streams. These coins can eventually be converted back into cash, creating a model similar to cryptocurrency transactions. This process has attracted the attention of regulators, with some suggesting that TikTok could face the same level of scrutiny as crypto platforms. Critics argue that TikTok’s coin management may expose the platform to regulatory challenges similar to those faced by cryptocurrency exchanges.
Concerns Over Financial Data and User Safety
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There are growing concerns about the security of financial data on TikTok, particularly given the geopolitical sensitivities surrounding the platform. The compliance expert’s letter to the FCA highlights TikTok’s rewards program, which facilitates fund transfers and allows virtual assets to be converted into real money. This structure mirrors the activities of crypto exchanges, potentially subjecting TikTok to the same cryptocurrency regulations.
Where Do TikTok’s Coins Come From?
Another key issue raised by the compliance expert is the lack of anti-money laundering controls and the uncertainty surrounding the source of TikTok’s coins. According to FCA guidelines, this would classify TikTok as a money services business, meaning it would be required to comply with anti-money laundering and counter-terrorism laws. This would also impose reporting and registration obligations on the platform.
In light of the FCA’s stringent stance on crypto regulations, which saw over 1,000 warnings and penalties issued to unregistered crypto firms last year, TikTok could soon find itself under the regulator’s watchful eye. The FCA rejected 87% of crypto license applications, further highlighting the tough regulatory environment. As TikTok’s coin system faces scrutiny, the platform may need to take additional regulatory steps to continue offering these services to its users.
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