The CNMV ties short to the advertising of cryptocurrencies: this is what it will be able to include and what not from February according to the new regulation

The National Securities Market Commission (CNMV) has been preparing a circular for several months to regulate the advertising of crypto assets, and today finally has been published in the Official State Gazette (BOE) in a document that specifies that it will enter into force a month after it appears in the BOE, therefore which will be in force from the middle of next February.

The document is quite exhaustive and specifies a significant number of restrictions, although it maintains one of the points that consumer associations they asked to change to the CNMV a few months ago, when the draft of the circular was submitted for public consultation: that these advertising actions will only have to be communicated in advance to the regulator if they are massive campaigns. That is, those addressed to more than 100,000 people through powerful media such as television, radio, print and digital media, social networks and outdoor advertising, such as posters on street furniture or public transport.

However, the CNMV has given in part to this demand and has included a section in which it states that may “require certain obligated subjects to provide this prior communication for all their advertising campaigns when it is considered so due to the impact that it could have on the target audience” even when these actions are not considered massive, although it does not specify what criteria it will follow to make these exceptions. Consumer associations wanted all promotional campaigns for crypto assets to be communicated in advance.

That yes, in the event that it considers it necessary, the CNMV may require those responsible for the campaigns all the information related to it after they have been launched, which they are obliged to send within a maximum period of three days. If the Commission considers that it fails to meet the criteria set out in the circular, may demand the rectification or cessation of the advertising action, a resolution that advertisers will have to comply with as soon as possible, and at the latest within a period of two days skillful.

What can and cannot be included

The circular specifies that all advertising about crypto assets will have to be clear, balanced, impartial and not misleading, communicated in simple and easy to understand language that does not give ambiguous, biased or incomplete information. Also, you must include warnings about the complexity of these investment products.

On the other hand, it points out that commercial communications must avoid references to high past returns or, if made, express specifically the period of time to which they refer, a maximum of 12 months prior to the launch of the campaign and with clear and complete information.

Likewise, the circular states that advertising messages must avoid create disproportionate or false impressions or expectations for the sole purpose of encouraging the consumer to invest in the cryptoactive that it promotes. And they should not be designed in such a way as to hide or omit data that could be used to make an informed decision for the investor.

In the event that the advertising format or communication medium prevents, due to space or time limitations, specifying all the information on this type of investment and its risks, the circular obliges advertisers to refer the consumer to alternative sources of information or collect it in a secondary piece, “so that it is possible to know in a quick and agile way all the relevant information or warnings about the cryptoactive”.

Another noteworthy point is that the regulation obliges those responsible for the advertising message to clearly distinguish advertised crypto assets, to avoid creating confusion and attract potential investors using popular cryptocurrencies to invest in products that have nothing to do with them. Likewise, if two or more crypto assets with different characteristics are offered simultaneously in the same campaign, it must be clearly indicated.

Advertisers are also required to specify the validity period of the offers, clarify possible references to tax benefits and avoid using the term gift or another equivalent in cases where the delivery of certain investment products may have tax repercussions for the recipient.

Finally, the ads may only include superlatives or diminutives or expressions of various kinds to specify the advantages of the cryptoactive if they are based on objective and verifiable data. In audiovisual support, if the piece lasts more than 60 seconds, warnings about the risks must be included at the beginning and at the end. In written formats, the letter and the type of font used must be easily legible.

Clear warnings about the risks

Regarding the warnings about the complexity and risk of crypto assets, this regulation obliges advertisers to warn that it is about high-risk products that can lead to the total loss of the money invested, that they are not covered by customer protection mechanisms such as the Deposit Guarantee Fund, that their prices are constituted in the absence of mechanisms that ensure their correct configuration and that many of them may not have the necessary liquidity to undo the investment without the consumer suffers significant losses.

It also specifies that the risks associated with the technology they use must be communicated, such as the system they use to record transactions, the blockchain, is in an early stage of development that can lead to problems of operation and safety.

Finally, advertisers will also have to warn of the legal complications that operating with crypto assets may entail, such as when the service provider is not located in a country of the European Union the resolution of any conflict can be much more costly and go beyond the scope of competence of the Spanish authorities.