Approval by the CNMV of the Circular on cryptocurrency advertising
The Comisión Nacional del Mercado de Valores (hereinafter “CNMV”), after several months of preparation, published on 17 January 2022 a Circular to regulate the advertising of so-called “crypto assets” (Circular 1/2022, of 10 January, of the Comisión Nacional del Mercado de Valores, regarding the advertising of crypto assets presented as investment objects, hereinafter the “Circular”).
The general purpose of the Circular
The Circular, following the principles set out in Law 34/1988 of 11 November 1988 on General Advertising, aims to ensure that advertising about cryptocurrencies is clear, balanced, impartial and not misleading.
The Circular establishes a series of restrictions when advertising cryptocurrencies.
The CNMV will also have the power to request all types of information related to advertising campaigns that have taken place in relation to cryptocurrencies and may even demand that the advertising action be rectified or cease, with advertisers having to take such actions within a maximum period of two working days from the communication by the CNMV.
Who is bound by the Circular?
The Circular binds the following parties:
(a) Providers of services on crypto-assets, when carrying out advertising activities on crypto-assets.
- b) Advertising service providers.
- c) Any natural or legal person who, on its own initiative or on behalf of third parties, carries out advertising activities on crypto assets.
What kind of advertising cannot be included?
- Advertising that is misleading, unbiased, unclear and unbalanced.
- Advertising that does not use simple and easy to understand language.
- Advertising that is biased or incomplete.
- Advertising that does not indicate the complexity of these investment products.
- Superlatives or diminutives or expressions of various kinds may not be used to emphasise the advantages of making these investments unless they are based on objective and verifiable data.
Requirements to be met by crypto-asset advertisers
- Advertising campaigns must avoid mentioning past performance, and if they do mention past performance, they must clearly specify the period to which they refer and at the most within the twelve months prior to the launch of the campaign.
- Disproportionate or false impressions or expectations may not be created for consumers, with the sole intention of getting campaign audiences to invest.
- In the event that the advertising format used by advertisers, due to space or time constraints, does not provide precise and detailed information on this type of investment, an alternative place where they can quickly and easily access this type of information must be mentioned.
- A clear distinction must be made between the crypto assets advertised.
- They must indicate the period of validity of the offers they advertise.
Warning about the risk of this type of investment
It is important to bear in mind that the CNMV obliges advertisers of crypto assets to indicate the complexity and risk involved in this type of investment; they must also warn that this type of investment may result in the loss of all the money invested.
In this regard, we should remember that this type of investment is not covered by protection mechanisms, such as the Deposit Guarantee Fund, nor are they covered by a regulated market, and precisely for this reason, the public must be informed of the risk involved in investing in this type of asset.
In addition, some risks should be taken into account, such as the following:
- The risk associated with a technology that is in a developmental and immature phase, with the possibility of operational and security problems and the public must be warned of this danger.
- The risk that the service provider does not operate in the European Union, since, in the event of conflicts, it could fall outside the jurisdiction of the Spanish authorities.
It should be remembered that the cryptocurrency sector still has a very volatile and changing regulation, which needs to be constantly studied.
Therefore, at LILF we remind you that it is essential to have comprehensive, multidisciplinary legal advice that constantly studies the existing regulatory and jurisprudential landscape in the field.
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