The application of emerging technologies to the financial sector hand in hand with the revolution FinTech has brought, among other things, the figure of crypto assets. The term “crypto-asset” encompasses a wide variety of assets in the digital realm, taking different forms and characteristics. They include, for example, cryptocurrencies such as bitcoin or ethereum, tokens investment, tokens that give access to a product or service or the most recent NFT (non fungible tokens), very booming in video games or in art markets.
Therefore, a crypto asset is a digital asset that is characterized by three elements. First, it is registered in some form of distributed digital ledger secured with cryptography. Second, it generally uses technology blockchain o DLT (Distributed Ledger Technology). Third, it is used as a means of exchange or payment, for investment purposes, to access a product or service, or a combination of the above.
Among its advantages, the reduction of costs and processing time of transactions, or less interference from public authorities and the virtual absence of supervision and regulation when making use of decentralized technologies such as blockchain or DLT. But they are also at risk from a cybersecurity and investor protection perspective (particularly retailers), as well as from the complexity of their underlying technologies. Added to these risks are those of market stability.
For this reason, public authorities and financial institutions have launched various initiatives to alert customers to the risks. And also to guarantee compliance with the obligations to prevent money laundering. This has been done, for example, by the European Parliament, with its resolution of May 26, 2016 on virtual currencies, the European Securities and Markets Authority and our National Securities Market Commission (CNMV) or the Bank of Spain with various communications from the 2017.
Europe wants to regulate them through a future European Regulation, which will be directly applicable in all Member States. It is the so-called Regulation related to the cryptoactive markets, better known as the MiCA Regulation (for its acronym in English of Markets in Crypto Assets). It is currently being processed, and in principle it seems that it will be applicable in 2014.
For this reason, and significantly to strengthen investor protection, Royal Decree-Law 5/2021, of March 12, introduced a new article 240 bis in the consolidated text of the Securities Market Law. The article enabled the CNMV to develop the regulation related to the advertising of those crypto assets that are currently not regulated and that are offered as an investment proposal.
Circular 1/2022, of January 10, of the National Securities Market Commission, regarding the advertising of crypto assets presented as investment objects, has fulfilled this obligation.
The Circular does not establish a complete regulation of this type of financial assets, nor a substantive regulation of markets, but rather a particular aspect, that of its advertising. And in reality it does not cover all crypto assets, but only those that are subject to investment and that are not currently subsumed in the current legal concept of “financial instrument”, defined in article 2 and in the annex to the Securities Market Law. .
Therefore, the Circular develops the requirements to which the advertising activity on crypto assets must comply. It obliges any natural or legal person who carries out an advertising activity on them. It therefore includes the influencers. And it establishes a proportionate regulation, depending on whether or not it consists of a massive advertising campaign.
I am completely convinced that the Circular will help protect investors, especially citizens, and offers a framework of legal certainty for all parties pending the approval of the European MiCA Regulation.
Moises Barrio Andres. Lawyer of the Council of State. Professor of Digital Law.