New Law Requires Crypto Ads in Belgium to Include Warnings, Detailing Risks
Belgium joins other EU nations like Spain and the UK, which have already imposed regulations on cryptocurrency advertising content.
Cryptocurrency advertisements aimed at Belgian consumers will soon need to include warnings outlining risks to investors. This follows the implementation of a new law by the country's Financial Services and Markets Authority (FSMA), which is set to enter into force on May 17.
According to the authority, cryptocurrency marketing campaigns are required to include the general disclaimer: "Virtual currencies, real risks. The only guarantee in crypto is the risk." Advertisements will also need to contain another, broader warning detailing risks connected to the investment, or "a link or reference to such a warning".
What’s more, large-scale cryptocurrency advertisement campaigns must also receive approval from the Belgian authority. This means that any such advertising content must be submitted for review by the FSMA exactly 10 days before its planned publication. The authority defines large-scale marketing campaigns as those distributing advertisements to at least 25,000 consumers.
Lastly, information contained in any promotions must be accurate and cannot be misleading, meaning that information on the potential upsides of investing can’t be given without also warning of the associated risks, limitations, and conditions.
The FSMA argued their decision in a statement, saying that the new laws are intended "to ensure that the risks associated with virtual currencies are sufficiently prominent" in advertisements. It also stated that while investing in cryptocurrencies involves considerable risk, no legal framework existed to specifically govern cryptocurrency products. Risks outlined in the statement included "wild price fluctuations" and vulnerability to fraud and "IT-related risks".
In addition to the stricter rules imposed on crypto ads, the FSMA said it will be investing even more of its resources into providing financial education on virtual currencies and their risks. This includes distributing educational videos and an educational game aimed at young people in Belgium.
A 2022 study conducted by the Belgian authority on investor behavior found that young people (aged 16-29) formed the majority of those buying virtual currencies in the country. According to the study, making money quickly and trading in innovative products were the main reasons why people invested in cryptocurrencies. The FSMA said that the study’s findings help guide its actions in the sector.
Belgium isn’t the first EU country to make such a move, with other similar restrictions placed on crypto ad campaigns elsewhere in Europe. 2022 saw Spain’s securities markets regulator, the National Securities Market Commission (CNMV), impose restrictions on influencers’ marketing of crypto, requiring them to send ads to the authority for review prior to posting and including warnings about the risks associated.
Similarly, the UK’s Financial Conduct Authority (FCA) in February regulated that cryptoasset firms targeting their ads to UK consumers must comply with a new advertising regime. This meant that any cryptoasset promotions must follow an FCA-approved route before being made public, allowing the authority to closely monitor crypto advertisements targeting consumers in the country.
Some countries are opting for a harsher approach, with the Monetary Authority of Singapore (MAS) banning firms offering crypto services in the country from marketing their services to local consumers. However, companies are allowed to advertise on their own social media accounts and on their own website. MAS stated that they believe the trading of cryptocurrencies to be “highly risky and not suitable for the general public”.
In other recent news, we observed how the marketing of crypto had troubled the authorities in the U.S., with the Securities Exchange Commission (SEC), charging eight celebrities for illegally promoting cryptoassets Tronix (TRX) and BitTorrent (BTT). Six out of the eight celebrities agreed to pay a total of more than $400,000 to settle the charges, according to the SEC.
Crypto advertising regulations reflect the maturity of the industry and, hopefully, will decrease the proportion of scam projects. We can Observe the results after some time.
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