Belgian financial market supervisor, the Financial Services and Markets Authority (FSMA), will impose a new set of rules on the promotion of cryptocurrencies within its jurisdiction, which will come into effect on 17 May 2023.
Belgium Mandates Crypto Risk Warnings
There are three key areas to the new crypto advertising rule: the message must be accurate and not misleading, ads must contain mandatory risk information, and crypto companies need to inform FSMA ahead of any mass campaign.
In the Belgian Official Gazette, published last Friday, the FSMA elaborated that crypto advertisements need to provide risk details when counting the advantage of cryptocurrencies. These ads must provide a short and punchy warning and a "broader warning or a link or reference to such a warning."
Additionally, the regulator defined the mass campaign as any promotion with which companies are targeting at least 25,000 consumers.
"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," said the Chairman of the FSMA, Jean-Paul Servais.
"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."
Belgian Crypto Investors Are Concentrated in One Region
The regulatory move against the rampant crypto ads came after a survey that quizzed 1000 investors in November 2022. The FSMA conducted market research with IPSOS, which found that 80 percent of crypto investors are men. Also, the prolonged 'crypto winter' and the collapse of FTX hardly impacted the Belgian's sentiment towards the market, as only 7 percent of the survey participants said they would never trade cryptocurrencies because of those events.
However, the amounts traded in virtual currencies are smaller than in traditional investments, as only 15 percent bought more than EUR 10,000 worth of virtual currencies.
"These figures are useful to help guide the FSMA's actions," Servais 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,' concludes Jean-Paul Servais."
Meanwhile, the foreign minister of Belgium recently called for a cryptocurrency ban, calling it a "speculative poison [with] no economic or social added value." (translated from Dutch as seen in the tweet below)
Nog een les te trekken uit de huidige bankcommotie. Leg een strikt verbod op cryptocurrencies op. Speculatief gif en geen enkele economische- of sociale toegevoegde waarde. Als een overheid drugs verbiedt, moet ze ook crypto’s verbieden.
— Johan Van Overtveldt (@jvanovertveldt) March 17, 2023
A Strict Financial Regulator
Belgium's FSMA is known to be a tough financial market supervisory with its market regulations. It is the only European county to ban the offering and sale of contracts for differences (CFDs) contracts, which are otherwise hit on many other regional markets. Recently, it flagged about two dozen clones and fraudulent platforms illegally offering complex financial instruments in the country.
Last year, the FSMA 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 notify their activities.
Meanwhile, other regulators in and outside Europe are bringing strict rules when it comes to crypto advertisements. The UK's ads regulator has flagged and taken down the crypto ads of many companies, including one of a major football club. Furthermore, the authorities in Thailand, South Africa, and India mandated risk warnings for crypto ads.
