Spain has taken a major step in cracking down on advertisements related to unregulated crypto assets. Other European countries may follow the same. It has issued a new guideline with respect to regulating the segment. Social media influencers and other similar digital service providers need to now notify the countrys national securities market commission about advert content that should be equipped with an investment risk warning.
The primary focus is to ensure the promotions and advertisements of crypto assets are true, non-misleading and understandable along with briefing the investors about associated risks as the crypto sector lacks complete regulation and protecting investors is a big challenge for the watchdog.
The advertisements and promotions should include a phrase stating the crypto segment is not regulated and may not suit retail investors as one may lose the full investment amount.
It is learned that the European nations will be closely watching the Spain market and may crackdown with similar steps in their respective jurisdictions.
The French finance ministry has the power to investigate crypto asset advertising and lately a reality TV star was fined 20,000 euros as the content of his advertisement was misleading.
Advertising Standards Agency in the United Kingdom lately banned advertisements from Arsenal FC amid concerns of misleading information. It had raised alarm related to the promotion of digital assets and stated to be emerging with a relevant guideline soon for the segment.
The agency further said that the segment is a primary issue for them and they are monitoring as well as intervening where issues are detected. Retail investors should be well aware of the associated risks before investing in crypto assets and simultaneously the companies are asked to ensure the advertisements are not socially irresponsible and misleading.
A crypto asset refers to such asset or cryptocurrency that is tokenized, which means the transfer of value of an object to a blockchain. It can be classified into various categories including NFT, DeFi and tokens.
It originated in the form of cryptocurrency, a digital currency and was used as a medium of exchange with the help of a network of computers across the world, in 2009. It is decentralized and not under the direct control of any bank, government or authority. The ownership records are maintained in a digital public ledger.
Bitcoin was the first cryptocurrency and its initial success led to the birth of many more crypto coins such as Ethereum, Dogecoin and Litecoin. The number is in thefew thousands. Several countries like China have banned the segment while El Salvador has officially announced Bitcoin as a legal tender.