The CNMV's intervention in the regulation of crypto advertising was inevitable given its remarkable growth. We are going to analyse the entry into force of Circular 1/2022, which regulates the principles and criteria to which advertising activity on cryptoassets and other assets and instruments presented as investment objects must be subject. In addition, it introduces the obligation to submit mass advertising campaigns to prior notification. This derives from final provision 2.1 of Royal Decree-Law 5/2021, of 12 March, which introduced a new article 240 (bis) in the TRLMV, authorising the CNMV to subject the advertising of crypto-assets or other assets and instruments presented as investment objects to administrative control. To this end, the precept entrusted the CNMV with the development, by means of a circular, of the specific control procedures to which such advertising activities would be subject.
What advertising is subject to the circular?
Any advertising aimed at investors or potential investors in Spain that implicitly or explicitly offers or "draws attention" to cryptoassets as an investment object, with the exception of cryptoassets whose only use is digital access to a product or service (utility token), provided there is no expectation of revaluation, NFTs (collectible assets, works with intellectual property, etc.).
Similarly, other information that is not considered to be advertising of financial investment products, such as explanatory documentation on new issues (whitepapers), presentations aimed exclusively at analysts or institutional investors of a new issue to ascertain their interest in it, publications issued by independent analysts on cryptoassets that are not sponsored or promoted, or advertising of seminars, courses and conferences on cryptoassets that, in any way, encourage investment in cryptoassets.
Who are the regulated entities?
Cryptoasset service providers, advertising service providers, as well as any other natural or legal person who, on their own initiative or on behalf of third parties, carries out advertising activity on cryptoassets, such as influencers for example.
Key aspects of the circular
It is mandatory that marketing communication always contain the following warning: "Investment in crypto-assets is not regulated, may not be suitable for retail investors and the full amount invested may be lost", and should not be incorporated as secondary information or in footnotes.
Advertising should also refer to the information and risks of what is being advertised, at least through a double layer of information referenced to a location that contains such information in a comprehensive and easily accessible manner, including the following message "It is important to read and understand the risks of this investment which are explained in detail at this location".
Mandatory prior notification for mass advertising campaigns
In the case of a mass advertising campaign, this notification must be made by filling in the form designed for this purpose and must be submitted via the web form available at the CNMV's electronic headquarters.
An advertising campaign will be considered mass by the CNMV when it targets more than 100,000 people, which, depending on the media used, will be measured by estimates and followers. Obliged entities must notify the CNMV, using the standardised form and with the relevant additional documentation, 10 working days in advance, of the following information: details of the cryptoassets or services to be advertised, the target audience and the advertising media and supports used for dissemination, the general details of the campaign, as well as a copy of all advertising pieces with a different message or format, reflecting the specific information of the campaign.
Once the 10 working days have elapsed since the prior notification, publication may proceed if the CNMV has not expressly prohibited it, although it is possible that once this period has elapsed and the campaign has begun, the CNMV may rule on the need to adapt some aspect in order to rectify the campaign in question.
Failure to submit the prior notification will imply the impossibility of continuing with the advertising activity from the moment the facts are known, without prejudice to any liabilities that may arise. Likewise, although campaigns that are not considered mass campaigns do not require prior notification, the CNMV reserves the right to require certain obliged parties to give prior notification of all their advertising campaigns, if it deems it appropriate due to the impact they may have on the public.
Register of advertising activity
In order to comply with the requirements or possible requirements of the CNMV on the regulation of crypto advertising, obliged entities must keep a record of current campaigns and those carried out in the last two years with the general details of the campaign: start and end date, territorial scope, description of the target audience, list of the media and advertising media used for its dissemination and a quantitative estimate of the number of people to whom it is addressed.
On the other hand, they must also record the specific information of the campaign, keeping a copy of all advertising pieces with different messages or formats, in the original format or in an electronic format that allows their reproduction, as well as the identification data of the advertising service providers and the advertising contracts or agreements signed. For its part, the CNMV may require the cessation or rectification of advertising campaigns, informing of the mismatch with the obligations of the Circular.
As lawyers specialising in crypto assets, we invite you to follow our blog posts to keep abreast of the latest developments in the sector and the regulation of crypto advertising. Do not hesitate to contact Vicox Legal for any legal advice or questions you may have.
