On May 17, 2023, the Financial Services and Markets Authority (FSMA), the financial market regulator for Belgium, will implement new regulations regarding the marketing of cryptocurrencies within its purview. Three basic aspects of the advertisements that have been supervised. This includes the credibility of the message, whether the ads contain the mandatory risk information and the prior information of the advertisements by the firms to the FSMA.
The FSMA of Belgium is renowned for its stringent market laws and financial market supervision. Contracts for Differences (CFD) arrangements, which are otherwise severely impacted on many other area markets, are not offered or sold in any other European country. The report by FSMA released last Friday, explained that crypto ads need to provide risk specifics when accounting for the benefit of cryptocurrencies in the Belgian Official Gazette.
A poll that asked 1000 investors in November 2022 led to the regulation action against the pervasive cryptocurrency advertisements. According to an IPSOS market study, which the FSMA funded, 80 percent of cryptocurrency investors are males. Furthermore, only 7% of respondents to the poll indicated that they would never trade cryptocurrencies as a result of the extended “crypto winter” and the demise of FTX. This indicates that the events had little effect on Belgians’ attitudes toward the market.
The regulator in the statement mentioned that, “Virtual currencies are all the rage at the moment, but they involve considerable risk.” “They are often subject to wild price fluctuations and are vulnerable to fraud and IT-related risks,” added the statement. The authority also specified that a mass campaign is any advertising effort in which businesses aim to reach at least 25,000 customers.
As per the study made by FSMA, investors have not been discouraged by the crypto winter or the failure of major exchange FTX because the main motivation for trading virtual currencies is the potential for fast financial gain. The Chairman of the FSMA, Jean Paul Servais reflected that, “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.”
The only European country to ban the offering and sale of contracts for differences (CFDs) contracts, Belgium is known for its tough market. It recently alerted authorities to about twenty fraudulent platforms and copycat websites selling sophisticated financial assets unlawfully in the nation. In order to enact stringent regulations that are difficult for companies to comply with, many European nations have begun to follow Belgium’s path.