New rules will require social media influencers advertising crypto to seek prior approval before publishing their content
Spanish regulators have today announced that starting a month from now, they will impose new guidelines around cryptocurrencies. As per the updated guideline policy, promotions by the so-called influencers will be restricted in what is a first for a member country of the European Union (EU).
According to a paper published by the National Securities Market Commission (CNMV) today, Spain intends to ensure that advertisements for products and services offer "true, understandable, and non-misleading content, and includes a prominent warning of the associated risks."
Big adjustments are coming along with the new policy
When the new policy comes into effect around mid-next month, influencers involved in crypto advertisements and their sponsors will be required to notify the CNMV prior to airing said advertisements. The requirements also necessitate that the advertisers mention the associated risk in the ads.
The report explained that the targeted influencers, having in excess of 100,000 followers, would be required to give such notice at least ten days before the publication of an ad. The new rules would apply to crypto service firms, advertising companies and any entities that carry out advertisements for themselves or another party.
Non-compliant firms or entities risk getting fined up to a maximum of €300,000.
The report also warned that crypto assets in Spain remain unregulated and, as such, were mooted not fit for retail investors, as they hold the risk of losing the entire investment.
On the need for regulation, Chairman of the CNMV Rodrigo Buenaventura, described the use of social media influencers to promote crypto tokens as a backdoor to avoid regulation. This is so because these new channels of advertisement do not subscribe to the same rules as other traditional media.
"If influencers weren't covered, there would be a backdoor to avoid regulation," Buenaventura told Financial Times.
Andres Iniesta's post on Binance
One of the motivating factors behind the CVNM publishing the new regulations is a post made football star Andres Iniesta back in November. The Spanish professional footballer and ex-Barcelona midfielder sent a tweet that appeared to lure users to crypto exchange Binance.
"I'm learning how to get started with crypto with Binance #BinanceForAll," Iniesta wrote, accompanying the text with a picture of him supposedly completing a transaction on the exchange.
The CVNM replied to the tweet that reached out to Iniesta's 25 million-large following, cautioning the World Cup winner that "crypto assets, being unregulated products, carry some significant risks." However, according to Reuters, there was no indication to show that Iniesta was paid to publish the tweet.
The move by Spain to contain crypto marketing on social media will almost certainly attract the attention of other countries seeking to define their stances on crypto advertisements.
It is worth noting that the UK advertisement regulator, ASA, banned seven crypto ads in mid-December, labelling crypto a 'red-alert priority issue.' Other countries outside Europe are taking similar action. Singapore earlier today set new restrictions on crypto ads targeting the general public.