Belgium mandates all crypto ads to include a stern warning about the risks involved in cryptocurrency

Belgium has issued an order to cryptocurrency ads, requesting that investors be sternly warned about the risks of trading cryptocurrencies. Belgium’s Financial Services and Markets Authority (FSMA) asks that cryptocurrency ads be required to state that “the only guarantee in crypto is risk.”

The rules are intended, among other things, to ensure that the risks associated with virtual currencies are sufficiently prominent in such advertisements, an FSMA statement to improve its actions to protect customers reads.

In addition, the FSMA will be investing even more in financial education about virtual currencies, including via an educational video it is launching at the start of the 8th edition of Money Week.

Arguably the riskiest asset anyone can ever gather, cryptocurrency is primarily feared for its horrible volatility. Its long run of losses in 2022 forged a hard-shell fear in the minds of investors, particularly regulators, who have internally determined to throw their weight behind policies that will keep the volatility of crypto from hurting deeper than it already has.

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Set to impose a new set of rules on promoting cryptocurrencies within its jurisdiction, the new set of rules will come into operation on the 17th of May, 2023. 

“Virtual currencies are all the rage at the moment, but they involve considerable risk,” the FSMA said in a statement. “They are often subject to wild price fluctuations and are vulnerable to fraud and IT-related risks.”

Belgium mandates crypto risk warning 

There are three core parts to the new crypto advertising rule in Belgium.  The first is the accuracy of crypto ads; the ads must be accurate and not misleading; the second states that ads must contain mandatory risk information; and the third, which is the last, states that crypto firms must inform FSMA ahead of any mass campaign.

The Regulation sets out conditions that all advertisements must meet. So, for example, advertisements may not emphasize the potential advantages without accurately indicating the risks, limitations or conditions. Nor may advertisements contain any statements about the future value or return, which must be written in comprehensible language.

Any mass-media campaign to promote a digital currency in Belgium must be submitted to the Financial Services and Markets Authority (FSMA) 10 days in advance, allowing the regulator to intervene if needed.

The FSMA elaborated that crypto advertisements need to provide risk details when counting the advantages of cryptocurrencies. These ads must provide a short, punchy warning and a “broader warning or a link or reference to such a warning.”

In addition, FSMA described a mass campaign as an advertisement with a target of a minimum of 25,000 customers.

“Some consumers want to earn money quickly by trading in virtual cryptocurrencies. 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.

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“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.”

Interestingly, the move for a regulatory framework for crypto ads emerged after sampling was carried out in November 2022, which saw over 1000 investors questioned and their answers appropriately recorded. In the research organized by FSMA, 80% of crypto investors in Belgium are men. 

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However, the shocking revelation is the absence of a palpable impact from the losses in 2022 on Belgians’ sentiment toward the markets. Many of these investors hold no grudge or fear towards the market, even though the crash has been bullish. As reported, only 7% of the survey participants stated they would never partake in cryptocurrency trading because of those horrible incidents.

However, there is greater involvement in traditional investments than in crypto trading. To prevent crypto investors in Belgium from incurring losses, the FSMA is instructing crypto companies in Belgium to include a message detailing crypto risks in their promotions.