Amid the continuous regulatory scrutiny,  Financial Services and Markets Authority (FSMA) disclosed its latest plan to enforce a new regulation to oversee crypto advertisements and target consumers in Belgium starting May 17, 2023. 

This update comes as regulators worldwide have become increasingly concerned about the risks of investing in cryptocurrencies. The European Union recently adopted crypto-focused legislation aimed at providing a legal framework for cryptocurrencies.

FSMA To Monitor Crypto Ads

With the crypto ad regulation approved by a Royal Decree on February 8, 2023, the new rules center on adverts designed to attract crypto investments. They are released  either “as regular professional activity or on an occasional basis for compensation.”

The new regulation addresses virtual assets deemed as a means of exchange or payment, such as Bitcoin (BTC)  or Ethereum (ETH), while assets with only a utility function or serve as securities are excluded. 

According to the FSMA, it created the regulation because cryptocurrencies are considered a risky investment asset, popular among Belgians, especially younger investors. During a webinar held on Wednesday, FSMA shared details about the new regulation. 

According to the presentation, the regulator must be alerted 10 days before publishing a crypto ad. Particularly before the owner of a crypto ad – a trading platform or an influencer – posts it on various media channels such as social media, billboards, and websites. 

The FSMA further said it makes it essential for the messages used in the ad to disclose it is an advertisement. In addition, the ad must include clear warnings about the volatile nature of digital assets, their “lack guarantees,” and the legal mechanisms to prevent market manipulation or insider dealing.

The regulatory process also includes the FSMA mandating that crypto advertisers must retain their ad materials, agreements, and the list of platforms where they were shared for a minimum of one year.

The new regulation aims to protect Belgian investors from misleading advertisements and scams while ensuring that businesses operating in crypto follow the necessary guidelines.

Regulators Expressing Concerns Over Crypto 

Regulators worldwide are increasingly worried about the risks associated with investing in cryptocurrencies. The adoption of the crypto-focused Markets in Crypto Assets (MiCA) legislation by the European Union is a recent development that provides a legal framework for the nascent asset class, creating more clarity and certainty in the market.

Belgium’s regulatory move follows a similar decision by the UK’s Financial Conduct Authority (FCA) to ban cryptocurrency-related derivative products for retail investors. The FCA cited the high risks associated with these products, including investors’ lack of understanding and knowledge, as the main reason for the ban.

The global cryptocurrency market has grown significantly in recent years, with increasing numbers of investors seeking to diversify their portfolios with digital assets. While this growth has led to increased adoption and mainstream acceptance of cryptocurrencies, it has also increased fraudulent activities and scams targeting unsuspecting investors.

Therefore, regulations like the one implemented by Belgium’s FSMA are essential in protecting investors and ensuring the crypto industry’s growth is sustainable. More countries are expected to follow suit and introduce similar regulations in the coming years to ensure that the crypto market remains transparent, fair, and safe for all participants.

Meanwhile, the crypto industry seems slightly susceptible to recent news. Over the past 24 hours, the global crypto market capitalization has declined by 2.9%, with the total value slipping below $1.3 trillion.

Featured image from Unsplash, Chart from TradingView