The CNMV calls Spanish influencers to account for their crypto promotions

The National Securities Market Commission (CNMV) warned this Monday in a statement that there are some influencers (users of social networks with legions of followers) from the financial sector who are disseminating investment recommendations without complying with regulationsso you are going to contact them to request clarification about their activity.

“After making a review of social media activities of influencers In the financial sector, the CNMV has observed that some of them could be issuing investment recommendations without complying with the requirements established by the European Union (EU) regime,” the supervisor said in a communiqué. “If his indications are confirmed, he will require them to comply with the obligations established in the Market abuse regulation and its implementing rule“, he adds.

The production and dissemination activity of these recommendations is regulated in the EU Regulation 596/2014 about him market abuse and in the Delegated Regulation (EU) 2016/958 that develops it, and its main objectives are that the recommendations are presented in a clear, exact and objective manner and that informed about interests and conflicts of interest that the person issuing the recommendation has.

This regulation states that when the recommendations are made and disclosed by people such as influencers and not by supervised companiesthey are qualified as ‘experts’ and subject to additional requirements.

“With this supervisory action, the CNMV intends to promote compliance with the objectives of the legislation. That is, those who make investment recommendations properly identify themselves, present the recommendations objectively and disclose all relationships or circumstances that could affect their objectivity. And ensure equal treatment with supervised persons and entities that issue their recommendations in compliance with regulatory requirements,” the agency details in its communication.

The president of the CNMV, Rodrigo Buenaventura, has previously asked influencers to be responsible when promoting cryptocurrencies and has warned on multiple occasions of the risks for retail investors. On the other hand, this action occurs after the US Securities and Exchange Commission (SEC) fined the ‘influencer’ and businesswoman 1.26 million dollars (1.281 million euros). Kim Kardashian for having promoted a crypto asset on his Instagram account without revealing that It was paid advertising.

Investment Recommendations

The CNMV has recalled in a statement this Monday that an investment recommendation consists of information that recommends or suggest an investment strategy, explicitly or implicitlyin relation to one or more financial instruments or to the issuers, including any opinion on the current or future value or price of these instruments, intended for the general public.

The European Securities and Markets Authority (ESMA for its acronym in English), the regulator of the securities markets of the European Union (EU) to which the CNMV is attached, pointed out a year ago that the rules that apply in situations in which someone, established inside or outside the EU, disseminates information in which it proposes an investment decision on EU financial instruments addressed to a broad public: “The dissemination of information would includefor instance, the publication of an opinion on the current or future price of a particular stock. In EU law, this is called an investment recommendation.”

To determine if a recommendation it is necessary to analyze the substance of what is communicated, that is, whether an investment strategy is recommended, regardless of the name given to the communication, its format or the medium through which it is disseminated. In this way, for information to constitute a recommendation, it does not need to be in writing or named as such.