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Uncontrolled crypto investment advertising: CNMV to supervise these products

The Government in Spain will change regulations so that the CNMV could supervise investments and advertising in the crypto sector. An important aspect is that investment in cryptocurrencies is very volatile. The lurches are very important and therefore the retail investor must be protected if he does not really know the product.

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According to recent information, the Government in Spain is going to reform the regulation on the advertising of financial products so that the National Securities Market Commission (CNMV) can exercise supervision over cryptocurrencies as financial assets.

This implies that the CNMV will be able to force the withdrawal of advertising that it considers misleading just as it can do with the marketing of investment funds or bonds. This is a further step in the normalization of cryptocurrencies as an investment product and also cuts the wings of those who try to profit by deceiving the unwary.

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Cryptocurrencies as just another financial asset

Although within the crypto world this can be seen as a way to prevent the popularization of investment in Bitcoin and other cryptocurrencies, the truth is that it is a normalization of this type of product.

If cryptocurrency investors want these types of assets to become more popular, the best thing to do is for the authorities to put them in the same bag as other investment products. The more regulations that apply, the more confidence there will be for both individual and institutional investors to invest in crypto.

On the other hand, this step is logical. With the revaluations that Bitcoin and company have had in recent months, misleading advertising is everywhere. There are ads that indicate guaranteed returns (when in fact they are not) and this must be stopped. That it is via the mechanisms that the CNMV has is much better than through the consumer route, as it already has specific legislation for this.

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Cryptocurrencies are highly volatile investments

Another important aspect is that investment in cryptocurrencies is very volatile. The lurches are very important and therefore the retail investor must be protected if he does not really know the product.

Many cryptocurrency investors argue that this supervision is paternalistic and that precisely Bitcoin emerged to break the established rules, State control and give freedom to its users. However, I disagree. Regulated products give peace of mind and if what they really want is that there are more investors the best thing is that the products they offer and the security of custody are firmly regulated.

Preventing another Afinsa and Forum Filatélico

Proponents of cryptocurrencies argue that we are dealing with a scarce and irreplicable asset and that therefore its capacity as a safe haven asset may be superior to that of gold.

However, the case of Afinsa and Forum Filatélico comes to mind. There was also a consensus that stamps had value and were also assets with a certain scarcity. But there came a time when everything collapsed when it became clear that in order to maintain value new customers had to keep coming.

Cryptocurrencies may be something like stamps, they may not and may be something more like gold. But what is certain is that in order to prevent Afinsa and Forum Filatélico from happening, the authorities must be vigilant, and not only in Spain but all over the world.

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(Featured image by mohamed_hassan via Pixabay)

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First published in elBlog Salmon, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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Helene Lindbergh is a published author with books about entrepreneurship and investing for dummies. An advocate for financial literacy, she is also a sought-after keynote speaker for female empowerment. Her special focus is on small, independent businesses who eventually achieve financial independence. Helene is currently working on two projects—a bio compilation of women braving the world of banking, finance, crypto, tech, and AI, as well as a paper on gendered contributions in the rapidly growing healthcare market, specifically medicinal cannabis.