Meta Platforms' Instagram, Alphabet's YouTube, TikTok and Twitter could face regulatory action after European consumer group BEUC complained to the European Commission and consumer authorities that the online platforms allegedly facilitate the misleading promotion of crypto assets.
US regulators suing crypto platforms Coinbase and Binance, along with last year's collapse of FTX, have sparked concerns over consumer protection related to crypto assets such as bitcoin and ether.
The European Union last month adopted the world's first comprehensive set of rules for cryptoasset regulation (MiCa).
BEUC in its complaint filed on Thursday said the proliferation of misleading advertisements of crypto assets on the social media platforms is an unfair commercial practice as it exposes consumers to serious harm such as the loss of significant amounts of money.
It said this was happening through advertising and influencers.
It urged the Consumer Protection Cooperation Network to require the online platforms to adopt stricter advertising policies on crypto and take measures to prevent influencers from misleading consumers.
The Network should subsequently inform the European Commission about the effectiveness of these measures, BEUC said in its joint complaint with nine of its members.
The group called on European consumer authorities to cooperate with European Supervisory Authorities for financial services to ensure the platforms adapt their advertising policies to prevent the misleading promotion of crypto.
"Crypto will be regulated soon with the new Market in Crypto Assets Regulation but this legislation does not apply to the social media companies benefiting from the advertising of crypto at the expense of consumers," BEUC Director General Monique Goyens said in a statement.
"This is why we are turning to the authorities in charge of protecting consumers to ensure Instagram, YouTube, TikTok and Twitter fulfil their duty to protect consumers against crypto scams and false promises," she said.
Consumer groups in Denmark, France, Greece, Italy, Lithuania, Portugal, Slovakia and Spain also signed up to the complaint.