On Monday, the Spanish government moved to regulate rampant advertising of crypto assets such as those seen on social media. The rules task the stock market supervisor with authorising mass campaigns and making sure investors are aware of risks before investing in them.
The rapid growth of cryptocurrencies and digital assets pegged to traditional currencies has drawn attention from regulators worldwide, who fear they could put the financial system at risk if not monitored.
Spain’s new regulations will start on February 15th and allow CNMV to specifically monitor advertising for all types of crypto assets and to include warnings about risks involved in such investment. Crypto-asset service providers when advertising their activities will also need to notify CNMV 10 days prior under the guidelines. Those subject to this requirement include influencers with more than 100,000 subscribers and who are paid to advertise and promote crypto assets.
The rules also apply to any person advertising on their own or on behalf of third parties, such as soccer star Andres Iniesta who promoted the cryptocurrency exchange platform Binance on his social media accounts in November. Cryptocurrencies such as Bitcoin have experienced high price volatility accompanied by a significant increase in aggressive advertising to attract investors.
The bill proposing these new measures has already been discussed in the Congress of Deputies [lower house], but still needs to be approved by the Senate [upper house]. Then, it will be submitted for debate before its final approval. In short, this is only the beginning.
In the Spanish case, this bill also regulates paid public messages that promote or advertise virtual currencies on social media networks .
This means that Bitcoin ads posted on Facebook, YouTube or Twitter would have to meet several criteria: they must provide relevant and adequate information about their characteristics and risks, so as not to deceive or mislead consumers. This also applies to any information given by the advertiser about its business, including any online platform used for this purpose.
The bill also implies that these messages must be clearly identified as advertising – since they are paid messages – which is not stated explicitly at the moment.
What will change in social media influencer marketing?
According to information reported on ABC, the Spanish Association of Social Media Influencers has expressed concern over this new regulation . It would include a fine of at least 30,000 euros to those who have not complied with the rules set out by Congress. The same text announced that publishers or intermediaries should indicate whether promoters are being remunerated for promoting digital currencies.
Social media users do not follow political parties or legislators to see their daily lives, but to know their opinions about certain topics. This means that they go out on the Internet every day to read tweets, watch videos and click on links .
However, as it happened with crypto ads, this provision – which still has not been approved by the Senate – should also be applied to promoters who earn money by publishing certain content on social networks.
All these provisions seem like a first step towards other countries where cryptocurrencies are not regulated: Japan and South Korea . Unless we discover other reasons for taking such measures. Stay tuned.