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TikTok May Face UK FCA Probe Over Unregistered Crypto Exchange Claims

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TikTok may soon face scrutiny from the Financial Conduct Authority (FCA) over concerns that the platform is operating an unregistered crypto exchange in the UK.

This potential regulatory issue adds to TikTok’s growing list of challenges, including ongoing criticism regarding child safety and privacy concerns.

TikTok’s In-App Currency Attracts UK FCA Attention

Local media reported that a compliance expert wrote a letter to the FCA, the UK’s financial watchdog, detailing how TikTok may be operating an unregistered crypto exchange in the country. The allegation focuses on the platform’s virtual coin system and creator rewards program. Based on the report, these qualify as crypto asset-related activities under the FCA’s framework.

TikTok’s virtual economy, underpinned by its in-app currency called ‘TikTok Coins,’ allows users to purchase virtual tokens with real money. These can be exchanged for virtual gifts, and holders can send them to their favorite content creators.

For the platform, this system enhances user engagement and provides creators with a revenue stream. However, compliance experts see it as a tactic to facilitate unregulated financial transactions, citing regulatory loopholes in the FCA’s oversight.

According to compliance experts, TikTok’s virtual coin system should be subject to anti-money laundering (AML) and counter-terrorism financing (CTF) regulations as enforced by the FCA. This is because it enables the exchange of virtual assets for fiat currency.

Notably, the FCA’s list of approved firms shows TikTok has not registered with the regulator as either a money service business or a digital asset exchange. These two categories would require the social media platform to comply with stringent financial oversight.

Based on the letter to the FCA,

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Author: Lockridge Okoth

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