May 13, 2021

The CNMV plans to restrict the boom in cryptocurrency investment advertising


The National Securities Market Commission has begun this Monday the way to put a stop to the advertising that is carried out to invest in cryptocurrencies and cryptoactives, in full swing of commercial campaigns to attract specialized investors, but also those with less experience. The CNMV has started this Monday a public consultation with several proposals for the circular that will be called to exercise control and sanction cases where misleading information is made.

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The securities market supervisor was authorized last March in an additional provision of the Royal Decree on aid to the solvency of companies to undertake this regulation. As the CNMV underlines in a statement this Monday, this permission to regulate is limited exclusively to advertising, since the operation of the cryptocurrency and crypto-assets market will remain as it is to date.

“The option of not drawing up a specific rule on the matter and replacing it with criteria or indications of good practices is discarded”, defends the CNMV in its statement. The supervisory body points out that, despite the fact that it is an unregulated field at European level, advertising campaigns that refer to investment in this type of products have multiplied, which do not have the same control as other investment markets such as the Stock Exchange or debt bonds.

The CNMV proposes that the rule affect “advertising activity aimed at potential investors residing in Spain in which crypto assets are offered or called to attention.” The CNMV is “considering” including in the standard the providers of services on crypto assets, whose definition would be contained in the Circular, regardless of their country of origin, and the advertising companies that act on their behalf.

The agency indicates that it is “in favor” of requiring prior administrative authorization for massive campaigns directed at the general public that are carried out through the media, physical media or certain virtual media. “The rest of the advertising actions would be subject to the subsequent supervisory action of the CNMV who may request the cessation or rectification of the advertising activity according to the terms established in the Circular”, adds the body. “This differentiation responds to reasons of efficiency and agility, at the same time that it allows ensuring prior supervision in those cases of massive advertising”, he justifies.

In order to receive the endorsement of the CNMV, advertising campaigns must be “clear, balanced, impartial and not misleading”. Specifically, the CNMV will focus on the information made on the profitability of the products that are advertised and, in particular, on the historical evolution and documentation on the costs of these operations. In addition, the CNMV advances that the campaigns will be subject to the mandatory introduction of warnings about the risks of investing in crypto assets, both in a priced and abbreviated way in each communication and in more extensive auxiliary documentation.

The CNMV will establish a supervisory regime in which it will detail what the procedures and deadlines will be to collect the information, demand the cessation or proceed with the sanctioning action. The organism advances that “given the potential impact of the advertising campaigns” the terms to act will have to be “limited” and “it is not foreseen” that they are superior to three days.

The consultation will be open publicly until April 16. The creation of this regulation on advertising by the CNMV comes after both this body and the Bank of Spain made a joint statement in which they warned of the risks for investors of this type of assets that are very volatile and do not count with institutional control.

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