Spanish regulators have targeted sham crypto trading on social media

Spain's National Securities Market Commission (CNMV) is stepping up its efforts to regulate crypto trading and promotions on social media.

The move is part of a broader crackdown on financial fraud, particularly the unregulated and often misleading crypto-marketing sector.

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Recent CNMV actions highlight growing concerns about deceptive financial promotions, particularly in the crypto sector. CNMV president Rodrigo Buenaventura said

“We have been particularly active in combating money laundering. Crypto-finances and fraud are not the same thing, but a significant part of fraud in recent years has come from the crypto world.

This statement highlights the need for regulatory bodies to address the growing misuse of social media for money laundering.

The active approach of the CNMV involves the promotion of advertising campaigns on social media platforms such as X (formerly Twitter) by non-licensed financial entities. These campaigns often use public figures illegally to mislead investors about the legitimacy of the offers. “It's hard to think of a more blatant attempt at fraud,” Buenaventura commented, stressing the need to strictly enforce regulations.

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In response to these challenges, the CNMV implemented new rules to ensure that internet companies, media outlets and social network advertisers are authorized financial entities.

This initiative aims to prevent the distribution of investment service advertisements by unauthorized entities. Buenaventura also confirmed,

We will exercise all of our regulatory and punitive powers in these matters.

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It's not just Spain. In the UK, the Financial Conduct Authority (FCA) has issued 32-page guidelines to ensure crypto promotions are “fair, transparent and not misleading”. This step, along with the issuance of 146 alerts on the first day of the new promotion regulations, will make a strong effort to curb profits in crypto investment promotions.

James Daley, managing director of Fair Finance, praised the FCA's initiative;

“At least now trading is regulated, which means the FCA has been issuing warnings and ensuring that misinformation is stopped.”

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This development is an important step towards establishing stronger regulation in the crypto market.

However, regulation of cryptocurrency marketing has sparked controversy. Critics argue that treating cryptocurrencies as regulated investments can lead to a “halo effect”. This means investors can take them seriously because of their apparent regulatory approval.