- Spain has granted the CNMV authority over crypto ads in the country, and the regulator has already issued tougher new rules on the same.
- The country is among others in Europe and regions of the US that are getting serious about “misleading” crypto promotions.
Spain has now joined European regulators in the crackdown of crypto ads, particularly those it considers misleading. The country’s National Securities Market Commission (CNMV), an independent body responsible for financial regulation of securities markets, has now been granted oversight power on crypto adverts.
With its new authority, the CNMV has today issued a set of rules regulating digital asset promotions in the country. Anyone promoting cryptocurrencies, including digital asset service providers and paid social media influencers, need to notify the watchdog about their advertising content. Additionally, these actors must accompany crypto ads with the regulator-specific warning on the risk of making such investments. The warning reads:
Investments in crypto-assets are not regulated. They may not be appropriate for retail investors and the full amount invested may be lost.
Action on crypto ads in Spain and other European countries
A statement by the CNMV regarding the new regulations reads:
The aim is to ensure that the advertising of the products offers true, understandable and non-misleading content, and includes a prominent warning of the associated risks. This is particularly relevant in the field of crypto assets as the absence of a complete regulation is a challenge for investor protection.
Another European nation that is getting tough on crypto advertisers is France. Its finance ministry has come up with a unit to investigate digital asset promotions. Even more, a French reality TV star was recently fined 20,000 euros for “misleading commercial practices” after promoting a Bitcoin trading platform on Snapchat.
On the other hand, the UK’s ad regulator, the Advertising Standards Agency (ASA), has banned several “misleading” crypto ads. Among them are promotions by Coinbase, Kraken, Arsenal Football Club, Floki Inu, and Papa John’s Pizza to mention a few. According to ASA, these promotions are misleading to investors since they do not address the risks associated with crypto investments. Previously, the regulator noted that it plans to issue new guidelines on crypto ads in the next six months.
Legal action in the US
Action against unregulated and falsified crypto ads has also been evident in the US. Last week, American media personality Kim Kardashian and former professional boxer Floyd Mayweather were sued over promoting a cryptocurrency called EthereumMax. A class-action lawsuit in California’s District Court accused the pair of orchestrating a pump and dump scheme of the digital currency. Kim promoted EthereumMax via Instagram while Mayweather endorsed it by accepting it as a payment option to a high-profile boxing match. Thereafter, the coin’s price crashed a mouth gaping 98 percent.
In July last year, a Coinbase customer sued the exchange for $5 million for a “misleading” crypto ad. The firm allegedly failed to inform participants of a free entry option to the Dogecoin sweepstakes offer.