In a recent revelation, the Belgian Financial Services and Markets Authority (FSMA) will impose a new set of rules on the promotion of cryptocurrencies within its jurisdiction. The FSMA is the financial regulatory agency in Belgium.
Sources reveal that the new regulation for advertisement which will come into effect on May 17, 2023, has three key areas. The key terms can be listed as follows:
- The message must be accurate and not misleading.
- The advertisements must contain mandatory risk information.
- Crypto companies need to inform FSMA ahead of any mass campaign.
In the recent Belgian Official Gazette, the regulator elaborated that crypto advertisements need to provide risk details when highlighting the benefits of investing in cryptocurrencies. The FSMA also said that these ads must provide a short and punchy warning and a “broader warning or a link or reference to such a warning.” It also defined the mass campaign as any promotion with which companies are targeting at least 25,000 consumers.
Jean-Paul Servais, the Chairman of the FSMA, said that consumers look forward to investing in crypto to make profits but must also consider the risks. Hence, the regulator is ramping up its authority to monitor the asset and enhance awareness. In his words:
Some consumers want to earn money quickly by trading in virtual currencies. This goes hand in hand with great risks. In order to better protect consumers, the FSMA is stepping up the pace when it comes to supervision and financial education.
Further, Servais talks of the upcoming regulation which gives the regulator the power to keep a check on crypto advertisements and to ensure that they abide by stated guidelines. He stated:
Thanks to the new Regulation, the FSMA will be able to check whether advertisements for virtual currencies are accurate and not misleading and whether the advertisements contain the compulsory warnings of risk.
Reportedly, the recent regulatory step against the crypto advertisements came after a survey from November last year that involved 1000 investors. The regulator conducted market research in collaboration with IPSOS, which revealed that around 80 percent of crypto investors are men. Ipsos Group is an acronym for Institut Public de Sondage d’Opinion Secteur, a multinational market research and consulting firm.
Additionally, the prolonged ‘crypto winter’ and the collapse of FTX from last year were found to have hardly impacted the Belgian’s idea towards the market. Data suggested that only 7 percent of the participants opined they would never trade cryptocurrencies because of those events. However, the amounts traded in digital currencies remain smaller compared to traditional investments.
The FSMA chair also mentioned the survey in his speech and said that the gained figures have been useful to help design the regulator’s course of action. He added:
They also indicate the usefulness of the FSMA’s approach and strengthen its resolve to continue to take a proactive attitude in this area.
In general, the Belgian government and the FSMA are known to be not very welcoming towards cryptocurrencies. On Friday, Johan Van Overtveldt, a member of the European Parliament and former Belgian finance minister, called for a complete ban on crypto in the wake of the recent turmoil in the banking sector.
The FSMA is known to be a strict regulator with stringent authority over the market. Last year, the agency mandated the registration of all virtual currency service providers, including exchanges and wallet providers, that are operating within the country. Moreover, the market supervisor needs the crypto companies to update them about their activities.
Meanwhile, other regulators across the globe are bringing strict rules specific to crypto ads. The British regulator raised concerns over the advertisements and said that breaches of new rules could result in a prison term of up to two years. Furthermore, the authorities in the US, South Africa, and India have also highlighted their concerns.
In December, the regulators in the US started closely monitoring advertisements relating to cryptocurrencies. The spokesperson said that the agency is investigating several firms over possible misconduct relating to digital assets. The possible misconduct mentioned by the regulator here referred to the deceptive and misleading advertising and promotion relating to crypto.