Spain is imposing restrictions on influencers’ promotion of cryptocurrencies as European authorities struggle to get to grips with the unregulated sector.
In an apparent first for the EU, Spain’s national securities market commission has been given the power to regulate crypto advertising.
The measures, set out in the country’s official journal on Monday, take effect in a month’s time. They require influencers and their sponsors to pre-notify authorities of some posts and to warn of crypto’s risks or face fines.
“We are very excited about how this will bring some order to how crypto is promoted, not just through traditional media but also through influencers,” Rodrigo Buenaventura, the watchdog’s head, said in an interview with the Financial Times.
“If influencers weren’t covered there would be a backdoor to avoid regulation. This is new terrain, for us and for them, and there will be moments of friction but that always happens when you bring in rules for something that wasn’t regulated before.”
The new powers for the Spanish watchdog come after its November clash on Twitter with Spanish footballing legend Andrés Iniesta over his paid promotion of Binance, the world’s biggest cryptocurrency exchange, when the commission told the World Cup winner it was his responsibility to inform followers of crypto’s risks.
Proposed EU-wide regulations on the sector are not yet agreed and do not attempt to harmonise rules for advertisers such as influencers.
As a result, Madrid and other European capitals are seeking to at least regulate promotion of crypto products. France late last year gave a unit supervised by its finance ministry the role of investigating online crypto advertising.
A French reality TV star was fined €20,000 in July for “misleading commercial practices” after posting a Bitcoin trading site advertisement on Snapchat.
“Like Spain has now done, other countries are deciding not just to wait a couple of years for the EU regulation to decide everything but to take on areas like publicity,” said Buenaventura.
Under the new Spanish rules, influencers will have to disclose if they are remunerated for promoting crypto, whether monetarily or otherwise.
If so, the watchdog will require their posts to include prominent “clear, balanced, impartial and non-misleading” statements about the risks of investment in crypto and a warning that crypto-investment is not regulated, potentially unsuited for retail investors and could lead to loss of all the assets invested.
Influencers or outlets with more than 100,000 followers in Spain will have to notify the watchdog of the content of their crypto promotions with at least 10 days of notice. Fines for non-compliance could reach €300,000.
The new Spanish publicity rules apply to crypto groups themselves and to PR companies they hire, as well as to influencers.
A European Commission official said Brussels had “no principled objection” to member states regulating ahead of the EU crypto regime — dubbed Mica — coming into force, as long as national and EU-level rules are compatible. “Depending on the specific situation, once Mica enters into force rules may have to be adjusted,” the official added.
In parallel, the UK Treasury is studying a proposal to tighten rules on crypto advertising. The new British regulations would probably require crypto adverts to receive prior approval from a company authorised by the Financial Conduct Authority, with possible fines for serious breaches.
Additional reporting by Akila Quinio in London
