How to advertise crypto in Spain

Not all that glitters in the crypto world is gold. Regulators around the world have long been looking for ways to create legislation to protect investors and pursue malpractice in the digital markets that never sleep.

In Spain, the institution carrying out these tasks is the Comisión Nacional del Mercado de Valores (CNMV). The securities markets supervisor regularly warns about the risks of investing in cryptocurrencies and works to bring order to this wild market. 

This February new regulation is coming into force. Basically, the CNMV wants advertising about cryptocurrencies to be honest and realistic, in order to protect especially inexperienced investors. 

If you are a content creator, influencer or marketer who wants to start advertising investments in crypto, or if you are an investor who feels uninformed or thinks this market isn’t reliable, you need to know what is changing from now on. 

New rules for crypto advertising

Photo by RODNAE Productions from Pexels

The CNMV published a circular in the BOE on 17 January requiring companies that are about to launch campaigns promoting investments in crypto assets on a massive scale to request authorisation at least 10 days in advance. 

So what is considered massive? A campaign that targets more than 100,000 people. However, there may be exceptions, and even when they are conducted on a smaller scale, the CNMV may also request prior notice of advertising actions or review them afterwards and request modifications or even their withdrawal.

These measures apply to all types of platforms: television, radio, press, outdoor advertising (billboards or street furniture) and online, like websites, social networks and video platforms. This means that it also includes influencers who produce sponsored content about crypto. 

The penalties for not complying with these rules are far greater than the regulator's warning to football player Andrés Iniesta on Twitter. Advertisers can face fines of €300,000 or double the gross profit made from the advertising action.

What should crypto advertising in Spain be like?

Photo by RODNAE Productions from Pexels

Clear, easy to understand, complete, unambiguous... you should be able to understand what the ads are telling you without being an expert on the subject or making a great effort. Just the way we like it at Vivid. 

Another requirement is that they must be clearly identifiable as advertising. If a media outlet publishes sponsored information, they should warn you about it.

In order not to raise unrealistic expectations among users, crypto asset advertising should also avoid references to large past returns and, if it does, the reference periods should be longer than 12 months. Otherwise, the volatility of cryptocurrency prices could lead to misleading conclusions. 

When advertising multiple crypto assets, it is necessary to explain the differences between them. Investing in the most popular cryptocurrencies can be very different from investing in smaller, unknown projects, which are more vulnerable to large fluctuations or "pump and dump"-type of scams because of their smaller capitalization.

If there is a special offer, advertisers are obliged to clearly specify the time frame, and avoid the term "gift" –or a similar one– if the product may have tax implications for the investors. 

Risk warnings 

Photo by Skitterphoto from Pexels

The CNMV keeps a close eye on financial advertising, not only for cryptoassets, but for all types of investments. But the peculiarities of crypto - their novelty, complexity, technological nature and lack of regulation - led the regulator to consider them a high-risk asset. Therefore, from now on, advertisers will have to include certain specific warnings.

Advertisements must communicate that crypto is a high-risk asset and that it is possible to lose 100% of the investment. In case of bankruptcy of the service provider, the investor is not covered by an investment guarantee fund, as in the case of stock exchanges. 

In fact, promotional actions have to include a warning message: "Investment in crypto-assets is not regulated, may not be suitable for retail investors and the full amount invested may be lost". In a video longer than 60 seconds, the warnings must appear at the beginning and at the end in an easily readable font size.

The Spanish supervisor warns that blockchain technology poses an added risk as it is still under development and susceptible to technical and security flaws.

Another concern mentioned in the circular is the legal risks. If the provider of crypto investment services is located outside the European Union, in the event of a conflict, it could fall outside the jurisdiction of the Spanish authorities and be much more costly and difficult to resolve. In fact, most of the financial fraud complaints received by the CNMV come from entities not authorised by this institution that offer crypto-asset brokerage.

In any case, remember the safest thing to do as an investor is to always maintain a critical attitude to promises of quick and easy money.