Crypto advertising is set to go under tough scrutiny and regulation in both the U.K. and Spain, as announced by their respective financial authorities. With the move, both countries are aiming at preventing false or misleading ads that may cause harm to investors.
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Crypto Advertising Regulation
As reported by The Guardian, Rishi Sunak, the U.K. chancellor said in a statement on Tuesday: “Crypto assets can provide exciting new opportunities, offering people new ways to transact and invest. But it’s important that consumers are not being sold products with misleading claims. We are ensuring consumers are protected, while also supporting innovation of the crypto asset market.”
According to the new regulation, the government will subject the advertising of cryptocurrencies and other types of crypto assets to the surveillance of the Financial Conduct Authority (FCA). This way, the regulatory standards for advertising these assets will be similar to those of other financial assets such as shares or insurance.
Sunak added that the government is making sure that consumers are protected, while it supports innovation in the crypto market. In this sense, the chancellor has stressed that it recognizes the "potential benefits" of certain products —such as those known as “stablecoins”— to achieve more payments efficiency.
Impact of Crypto Advertising Regulation
According to Treasury data, it is estimated that about 2.3 million Britons —just over 3% of the population— own some kind of crypto asset. However, the government has warned that, although the popularity of these assets is increasing, the understanding of these products is falling.
Meanwhile, The National Securities Market Commission (CNMV) in Spain will require prior communication of massive advertising campaigns on cryptocurrencies.
The Spanish regulator will demand that commercial communications include information on the risks of the advertised products, by adding a message stating that crypto assets are not regulated and they may not be suitable for retail investors —who might face losses.
Anto Paroian, Chief Operating Officer at cryptocurrency hedge fund ARK36, said, “Crypto investments have gone mainstream and with an estimated 8,000 individual cryptocurrencies and investment tokens available on the market, it is becoming increasingly difficult for retail investors to perform their due diligence.”
“Sadly, certain internet personalities at times have abused the trust of their audiences by failing to disclose they were being paid for promoting a certain cryptocurrency,” he adds.