TechFlow news, October 17 — According to Cryptonews, the short-video app TikTok is drawing regulatory scrutiny in the UK over allegations that its virtual currency system, "TikTok Coins," operates similarly to a cryptocurrency exchange. A compliance expert has issued a warning to the UK Financial Conduct Authority (FCA), recommending an anti-money laundering (AML) and counter-terrorism financing review of TikTok.
TikTok Coins allow users to purchase with real money and then gift them within the platform or use them during live streams. Users may also indirectly cash out these tokens through the creator program. This process closely resembles cryptocurrency trading, raising concerns among regulators.
In a letter to the FCA, the compliance expert stated: "TikTok facilitates transfers of funds to money service businesses through its reward programs and conducts or arranges exchanges between crypto assets and fiat currency." The expert also emphasized that without AML registration, the source of funds used to purchase virtual tokens cannot be properly verified.
According to FCA guidelines, TikTok's activities could classify it as a money service business. This would require TikTok to comply with anti-money laundering and counter-terrorism financing laws, including registering with relevant authorities and fulfilling reporting obligations.
