New CNMV Circular on advertising cryptoassets as investments

Ricardo Plasencia & Lucía Escauriaza 

On 17 January 2022, the Spanish National Securities Market Commission ("CNMV") issued a circular published in the Official State Gazette ("BOE") 1/2022 on 10 January 2022 relating to the advertising of cryptoassets presented as investments (the "Circular").

The Circular, which comes into force on 17 February 2022, defines the objective and subjective scope of cryptoasset advertising, establishes criteria to be followed when promoting these assets, and provides for a supervisory regime including prior notification of such advertising activity.  As such it is the first regulation published in a European Union country that regulates the advertising of cryptoassets.

All advertising of cryptoassets (defined as "a digital representation of a right, asset or security that can be transferred or stored electronically, using distributed recording or other similar technology") to investors, including potential investors, in Spain in which such assets are implicitly or explicitly offered or marketed as an investment are subject to this Circular.

This is presumed to be the case where purchasing cryptoassets is promoted, or where reference is made to current or future profitability, price or value of such cryptoassets, suggesting them to be an investment opportunity, even when they can be used as a medium of exchange.

On the other hand, advertising activity is understood to be aimed at investors in Spain when it is carried out (i) through physical means in Spain, (ii) through Spanish media, or (iii) in Spanish or other official languages in Spain, unless it contains measures that demonstrate that the services or products advertised are not aimed at or are not accessible to investors in Spain.

The Circular applies to (i) cryptoasset service providers, (ii) advertising service providers, and (iii) any natural or legal person who carries out such advertising activities, either for themselves or on behalf of third parties.

Consequently, any foreign natural or legal person that advertises cryptoassets to Spanish investors is subject to the rules of this Circular.

Certain advertising activities are excluded from the scope of the Circular, such as the advertising of cryptoassets (i) that cannot be, due to their nature, likely to be the object of investment , (ii) that are considered financial instruments (and are therefore subject to the advertising rules applicable to such assets), (iii) that serve exclusively to digitally access a product or service which is only accepted by its issuer or its contractually-related providers (utility tokens), and provided that no revaluation expectations are offered and where the volume offered and conditions of the offer are consistent with the inherent  rights associated with the cryptoasset in question, (iv) that are unique and non-fungible (NFTs) and are not offered as a mere investment.

The Circular also does not apply to (i) white papers of new cryptoasset issuances, (ii) corporate advertising campaigns with generic information about the cryptoasset provider, including sports sponsorships, (iii) presentations to analysts or institutional investors; (iv) independent analyst publications that are not sponsored or promoted; and (v) advertising for cryptoasset courses or workshops that encourage investment in cryptoassets and are not offered free of charge or for a symbolic price.

All marketing communications should include information on the risks of the cryptoasset with a specific warning as a disclaimer and a link including reference to detailed information concerning the risks of the product.

The CNMV will supervise these activities, carrying out an ex-post control of advertising communications. However, mass advertising campaigns (those aimed at more than 100,000 people through any advertising medium) will be subject to ex-ante supervision, with the CNMV requiring at least ten working days prior notification of the campaign before it is launched.  Although a lack of response from the CNMV during that period will not prevent the advertising campaign from being launched, this does not necessarily imply that the CNMV considers that such campaign complies with all the requirements of the Circular. 

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