The Spanish National Securities Market Commission (CNMV) is taking bold strides in its commitment to regulate cryptocurrency marketing and promotions, particularly on social media platforms.
Rodrigo Buenaventura, President of the CNMV, emphasised:
“We have been particularly active in fighting financial fraud. Crypto-finances and fraud are not synonymous, but a significant part of fraud in recent years has come from the crypto world.”
This initiative is a pivotal component of the CNMV’s broader crackdown on financial fraud, with a specific focus on the unregulated and often misleading crypto marketing sector.
The CNMV’s proactive stance involves scrutiny of advertising campaigns on popular social media platforms, such as X (formerly known as Twitter), especially those promoted by unlicensed financial entities.
These campaigns frequently exploit the images of public figures, misleading investors about the authenticity of the offerings.
Rodrigo emphasised the imperative for robust enforcement of regulations:
“It’s hard to conceive of a more blatant attempt at fraud.”
Source: FIC; Reported fraud losses by contact method January 2021 – June 2023
In response to these challenges, the CNMV has instituted new rules mandating internet companies, media outlets, and social networks to verify the authorization status of advertisers, particularly in the financial sector.
Rodrigo assured that:
“We will rigorously exercise all our supervisory and sanctioning powers in these cases.”
This initiative aims to curb the dissemination of investment service advertisements by unlicensed entities, contributing to a more secure and transparent financial landscape.
This regulatory trend is not exclusive to Spain.
In the United Kingdom (UK), the Financial Conduct Authority (FCA) has taken a parallel stance, issuing a 32-page guide to ensure fairness, clarity, and accuracy in crypto promotions.
The FCA’s vigilance is evident in the issuance of 146 alerts on the very first day of implementing new promotion regulations, signalling a determined effort to rein in excesses in the crypto investment promotions sphere.
James Daley, managing director of Fairer Finance, praised the FCAss initiative, stating:
“At least now the marketing of it is regulated, which means the FCA has been issuing warnings and ensuring that misinformation is stopped.”
Nevertheless, the regulation of cryptocurrency marketing has ignited debates.
Critics argue that subjecting cryptocurrencies to regulated investment standards could create a “halo effect,” potentially leading investors to perceive them more seriously due to apparent regulatory approval.