Spain moves to regulate crypto asset advertising

New rules in Spain means crypto currency promotions targeting over 100,000 people will need to be approved by the Spanish National Securities Market Commission ten days before deployment.

Any promotional activity around crypto assets will also need to include warning labels outlining the associated risks. Considering there’s such an anti-establishment thread running through crypto culture, presumably those involved in Bitcoin, Ethereum, etc, will have wildly different takes on what the pros of cons are compared to a regulatory arm of the Spanish state.

Luckily the CNMV has decided to draft a warning label itself, which will be required to be included with any promotion. It reads “Investments in crypto-assets are not regulated. They may not be appropriate for retail investors and the full amount invested may be lost. It is important to read and understand the risks of this investment, which are explained in detail at this link”.

Promotions going to less than 100,000 people, or posts coming from influencers with less than that many followers, will still be subject to the supervisory action of the CNMV but they don’t need to submit the campaigns beforehand.

While there is already government oversight in most places to ensure advertisers don’t blatantly lie – in the UK that’s the job of the Advertising Standards Authority – the CNMV states: “This is particularly relevant in the field of crypto-assets as the absence of a complete regulation is a challenge for investor protection.”

Basically, it’s being pitched as a state measure to protect investors from getting their fingers burned on something it plainly considers a bit dodgy, because it doesn’t get to regulate it.

The organisation goes on to list some exemptions from the new rules. NFTs seem to get a pass, while for some reason it seems to be drawing a distinction between investments and crypto assets that have ‘the nature of financial instruments’.

“The Circular establishes exemptions to the scope, such as the cases where crypto-assets have the nature of financial instruments (in which case the CNMV Circular 2/2020 on the advertising of investment products and services shall be applicable), when they are not used for investment purposes, certain “utility tokens” and solely non-fungible tokens, “white papers” of new issuances, certain presentations and publications of analysts or workshops, and corporate advertising campaigns when they comply with certain requirements.”

The rules come into place on February 17, 2022.

It’s all representative of a scepticism from many governments towards crypto currency and ultimately its potentially destabilising effects on the global economy. The entire cut and thrust of crypto currency is about having a form of commerce that is not linked to, underpinned, or in any way sanctioned by the state, but rather one which exists collaboratively between individuals around the world. So it all gets a bit messy when governments do start trying to get their hands around it.

It’s not just the old world versus the new, either. The situation is further complicated by the fact many governments already have created, or are at least looking into the possibility of creating, their own central bank digital currencies.

While it is still quite fringe to trade in Ethereum or Bitcoin, a key factor in wider adoption will be how the relationship between independent crypto currencies, state backed digital currencies, and traditional financial systems plays out. And perhaps most importantly how heavy-handed governments feel like being in forcing the issue in whichever direction they find preferable.