Spain leads European crackdown on crypto promotions

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Spain imposes restrictions on the promotion of cryptocurrencies by influencers as European authorities struggle to rein in the unregulated sector.

In an apparent first for the EU, Spain’s National Securities Market Commission has been given the power to regulate crypto advertising.

The measures, set out in the country’s official gazette on Monday, come into effect in a month. They require influencers and their sponsors to notify authorities of certain posts and warn of crypto risks or face fines.

“We are very excited that this will bring order to the promotion of crypto, not only through traditional media, but also through influencers,” said Rodrigo Buenaventura, the head of the watchdog, in an interview with the Financial Times.

“If influencers were not covered, there would be a back door to avoid regulation. This is new ground, for us and for them, and there will be moments of friction, but it always happens when you introduce rules for something that was previously unregulated.

The Spanish watchdog’s new powers come after his November Twitter clash with Spanish soccer legend Andrés Iniesta over his paid promotion of Binance, the world’s largest cryptocurrency exchange, when the commission told the World Cup winner that it was his responsibility to inform crypto followers. risks.

Proposed EU-wide regulations on the sector are not yet agreed and do not attempt to harmonize rules for advertisers such as influencers.

As a result, Madrid and other European capitals are looking to at least regulate the promotion of crypto products. Late last year, France gave a unit overseen by its finance ministry the role of investigating online crypto advertising.

A French reality TV star was fined €20,000 in July for “deceptive marketing practices” after posting an advertisement on a bitcoin exchange site on Snapchat.

“As Spain has done now, other countries are deciding not just to wait a few years for EU regulation to decide everything, but to tackle areas like advertising,” Buenaventura said. .

Under the new Spanish rules, influencers will have to disclose whether they are compensated for promoting crypto, whether monetarily or otherwise.

If so, the watchdog will demand that their posts include “clear, balanced, unbiased, and non-misleading” statements about the risks of investing in crypto and a disclaimer that investing in crypto is not unregulated, potentially unsuitable for retail investors and could lead to the loss of all invested assets.

Influencers or outlets with more than 100,000 followers in Spain will need to notify the watchdog of the content of their crypto promotions with at least 10 days notice. Fines for non-compliance could reach €300,000.

The new Spanish advertising rules apply to crypto groups themselves and the PR firms they hire, as well as influencers.

A European Commission official said Brussels has “no objection in principle” to member states regulating before the EU’s crypto regime – dubbed Mica – comes into force as long as national rules and European are compatible. “Depending on the specific situation, once Mica comes into effect, the rules may need to be adjusted,” the official added.

In parallel, the UK Treasury is studying a proposal to toughen the rules on crypto advertising. The new UK regulations would likely require crypto advertisements to receive prior approval from a company licensed by the Financial Conduct Authority, with possible fines for serious breaches.

Additional reporting by Akila Quinio in London

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