11 February 2022

Anton Golovkin |

What appeared to be a temporary phenomenon of cryptocurrency is lately becoming to represent more and more the reality of alternative payments and, at least, one of the products desired by investors. The Spanish regulator has also realized that cryptocurrency is here to stay for a longer period of time than it was initially foreseen and has begun to handle this situation by issuing new rules regarding this product.

In this regard, during the last year 2021 the Spanish National Stock Market Commission (“CNMV”) has posed its clarifications regarding the possibility for Collective Investment Institutions (“IIC”) to have exposures to cryptocurrency. Within said document, the CNMV referred mainly to three types of the IIC (i.e. UCITS, CuasiUCITS -i.e. UCITS that do not comply with DIRECTIVE 2009/65/EC-, and Hedge Funds -i.e. free investment Collective Investment Institutions-) setting out that, in accordance with their type, said institutions may invest into a variety of products: (i) starting from the financial products whose profitability may be connected to cryptocurrency (without implicit derivatives, such as ETC and ETN) and (ii) even to the derivatives whose underlying asset is directly cryptocurrency, provided that the settlement of the derivative would not imply the delivery of cryptocurrency.

Certain big players as BlackRock, JP Morgan and Santander, has begun to be interested in offering said type of financial products to some of their clients, even more eager after the referred CNMV’s clarification. In order to avoid indiscriminate advertising and marketing of said financial products connected with cryptocurrency, by the beginning of the las year 2021 it was introduced a new article in the Spanish Securities Market Law, allowing CNMV to request prior authorisation or establish other forms of administrative control regarding, inter alia, the advertising of crypto-assets, even if said assets are not regulated by said Law.

Last January 10, 2022, the CNMV has enacted the Circular 1/2022 on the advertising of crypto-assets presented as investment objects (the “Circular 1/2022”). The purpose of this document is to develop the rules, principles and criteria to which crypto-asset advertising activity must be subject -apart from the compliance with the provisions of the General Advertising Act 34/1988-.

It should be stated that the Circular 1/2022 is applicable to (i) crypto-asset service providers, (ii) advertising service providers, and to (iii) any individual or entity, who on their own initiative or on behalf of third parties, engages in an activity of advertising of crypto-assets.

Despite the fact that the definition of the crypto-asset advertising has a very broad definition within the referred Circular 1/2022, there are still a list of certain cases that are excluded from its application that should be taken into consideration within the legal assessment related thereto.

The advertising campaigns shall comply with all the content and format requirements established by the regulator. Additionally, mass advertising campaigns -mainly, those that are aimed at more than 100,000 people- are subject to a prior notification to the Spanish National Securities Market Commission (CNMV), where failure to submit said notification would entail the impossibility of continuing the advertising activity, without prejudice to the responsibilities that may arise.

The referred prior notification, as well as the content and format of the advertising, shall be carefully reviewed by the competent experts, since it would allow to start the mass advertising campaign ten (10) business days after its presentation to the CNMV and mitigate the risks regarding any eventual future inspections of said campaigns by the regulator.