Advertising of crypto assets in Spain will now be regulated by relevant government institutions.
Earlier last week, the government of Spain decided to start regulating advertisements related to crypto assets in Spain. Other countries that have done the same are Singapore and India.
The growth of the market for digital assets and crypto assets in Spain has been fast. Over the past few years, these assets have been competing with the growth of traditional currencies. Regulators across the world remain cautious about this situation. If not monitored properly, these newer currencies could threaten the financial system.
The value of crypto assets, such as Bitcoin and Ether, has been very volatile. This high price volatility is accompanied by high risks as well. Investors can experience either side of the spectrum; they can obtain high gains or lose just as much.
However, more and more individuals are getting into crypto assets. The high gains experienced by some investors, together with the aggressive advertising strategies that companies have, encourage people to invest.
With the new regulations stated in the official bulletin of the government, advertisers and companies that engage in marketing activities for crypto assets in Spain are required to inform the National Securities Market Commission (CNMV) about what they plan to do. This involves sharing the details of the content of the proposed campaigns at least 10 days before the campaign goes live. This regulation is applicable to campaigns that target more than 100,000 people. All other campaigns that do not fit the criteria are not required to abide by the regulation.
The stock market supervisor of Spain will then be in charge of authorizing the proposed mass campaigns. He should ensure that these advertisements effectively communicate the risks that come with investing in crypto assets. Proposed advertisements should also contain the relevant warnings for future investors.
Moreover, the advertisements for crypto assets should not be misleading and promise more than what they can deliver. They should be true and easily comprehensible for the target audience so that interested individuals know what they’re getting into, both its benefits and especially its risks.
Implementing this regulation will allow the CNMV to monitor the sector of crypto assets in Spain more efficiently. They will be able to track the advertisements for the different crypto assets available and promote the safety of interested investors.
The CNMV said that “investments in crypto assets are not regulated. They may not be appropriate for retail investors and the full amount invested may be lost”.
These new regulations for the advertisement of crypto assets in Spain will take effect in the latter weeks of February 2022.
Social Media Influencers Promoting Crypto Assets in Spain are not Exempted
This regulation not only applies to the companies, but also to social media influencers who promote crypto assets in Spain, whether as work done in agreement with a third party or initiated by themselves.
Social media influencers with more than 100,000 subscribers who are contracted by crypto asset companies to promote their products in exchange for payment should also notify the CNMV. The intended promotional posts, which should always include the risks of what they’re advertising, are subject to evaluation.
In November of last year, Andres Iniesta promoted Binance on his Twitter account. Binance is an online platform where individuals can buy and sell cryptocurrencies.
Andres Iniesta, a famous Spanish football player, posted a photo of himself using the Binance platform together with the caption “I’m learning how to get started with crypto @binance #BinanceForAll”.
The CNMV did not agree with what Iniesta did. Investing in crypto assets comes with a lot of risks. Before delving into this, he should have equipped himself with enough knowledge about how the market works and what possible negative consequences can come from putting one’s hard-earned money into this.
Even more so, he should not casually recommend this to others. He should have been more responsible since he has a wide reach of more than 25 million followers on Twitter and 38.7 million followers on Instagram. This can encourage his followers to partake in a risky activity despite not knowing what harm it can bring.
Over the past years, more individuals have been using social media. Currently, around 3.4 billion people all over the world are actively using these platforms. Social media influencers then become an important factor in the decision-making process of users.
Users turn to the celebrities and individuals that they follow to know the trends. They also hold the recommendations of these social media influencers in high regard, whether it be for clothes, food, or even financial investments.
It would then be prudent for social media influencers to post responsibly.
Some Information on Crypto Assets in Spain
There are around 1.1 million Spanish citizens who own crypto assets. This represents 2.51% of the country’s total population.
Crypto assets are defined as a “digital representation of an asset or right that can be electronically transferred or stored by using distributing ledger technologies or other similar ones”.
The Spanish government has proceeded with caution and taken a conservative stance on crypto assets. The law in Spain tends to favor the protection of investors and consumers, highly influenced by the numerous cases of financial and securities fraud during the recession.
Crypto assets are not legally considered as money for legal tender. Banknotes and coins denominated in euros are the only legal tender in Spain.
However, capital gains earned from selling crypto assets are subject to taxes, which can range from 19% to 23%. A higher tax rate is applied to capital gains that exceed 50,000 euros.
To prevent citizens from avoiding these taxes, measures were implemented. Service providers of crypto assets in Spain are obliged to provide information on the following:
- Balances concerning every different virtual currency and fiat currency together with their owners, beneficiaries, and authorized individuals
- Acquisitions, transmissions, and exchanges related to crypto assets
- Report of delivery by residents, entities, and permanent establishments of residents abroad that make initial offerings of new crypto currencies
Crypto assets are gaining traction among citizens. They are encouraged by the possibility of very high returns, with some individuals reporting having earned millions from these investments. However, as with any investment, caution should be taken because investing more than what you can afford to lose may have negative financial consequences.