The control of advertising on crypto assets is already a reality in Spain. This Monday the circular that the CNMV has been cooking since March of last year has been published, when the Government enabled her to monitor her. Campaigns targeting more than 100,000 people will require prior authorization by the supervisor and all ads will include warnings about the risk involved in investing in these assets, as published this Monday by the BOE.
The regulation, which will come into force in a month, will allow the CNMV to specifically monitor the advertising of all types of crypto assets. But the great power of this circular lies in the fact that companies that market crypto assets, and also advertising companies, will have to inform the CNMV at least 10 days in advance about the content of the campaigns, when they are considered massive.
The administrative silence – that the CNMV does not pronounce itself in the aforementioned 10 days – will not mean in any case that the massive announcements have the green light from the supervisor. Campaigns that are not aimed at more than 100,000 people will be subject to the supervisory action of the CNMV, which includes the procedures and deadlines for collecting information from the obligated subjects and demanding the cessation or rectification of advertising. They will also be exposed to the corresponding sanctioning regime.
The CNMV also has an ace up its sleeve. They must inform you as if they were massive of those campaigns that, even when they are not massive in the strict sense, “when it is considered so due to the impact they could have on the target audience.
Publications on crypto assets by independent analysts or commentators are outside the control of the CNMV (white papers) that are not promoted, certain non-fungible assets or those that are not subject to investment.
All advertising communications must include the following warning: “investment in crypto assets is not regulated, may not be suitable for retail investors and the entire amount invested may be lost”.
And not only that, they must direct the investor to a space detailing various additional dangers, when the format or the means of communication prevents the warnings from being included in the piece, under the title: “It is important to read and understand the risks of this investment that are explained in detail at this location.
The company must explain in that space, among other points, that the value of the investments and the return obtained from them may experience significant upward and downward variations, and the entire amount invested may be lost. That investments in early-stage projects entail a high level of risk, so it is necessary to properly understand their business model. That the crypto assets within the scope of this circular are not covered by customer protection mechanisms such as the Deposit Guarantee Fund or the Investor Guarantee Fund.
It will also be specified that “the prices of crypto assets are constituted in the absence of mechanisms that ensure their correct formation, such as those present in regulated securities markets” and that “many crypto assets may lack the necessary liquidity to be able to undo an investment without suffer significant losses, given that its circulation among investors, both retail and professional, can be very limited”.
In addition, companies must keep a record with the following information and documentation regarding the current advertising campaign and those carried out in the last two years, with the key data of the ads.
Rectifications in two days
Advertising, of course, must be “clear, balanced, impartial and not misleading and, in the case of those commercial communications and advertising pieces that provide information on the cost or profitability of a cryptoactive, these must contain clear, exact, sufficient and up-to-date, in a manner appropriate to its nature and complexity, the characteristics of the means of dissemination used and the target audience to which it is addressed”.
In the event of receiving a request for cessation or rectification, the obliged subject must, as soon as possible and in any case within a maximum period of two business days, either prove its compliance with the CNMV, or object to it, in which case it will allege the reasoned reasons on which the objection is based.