Belgian FSMA to get wider powers to police digital currency industry

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Belgium’s digital currency industry is bracing itself for new governing rules that will give the country’s Financial Services and Markets Authority (FSMA) wider powers.

Following heightened concerns for investors’ protection, the rules are expected to come into operation on May 17. The collapse of FTX and the contagion effect it had forced the FSMA to apply to the government for wider regulatory powers.

Under the incoming regulation, the FSMA will impose tighter restrictions on digital currency advertisements in the country, and a peek into the rulebook shows three basic requirements. The first requires all advertisements to be wholly accurate, while the second imposes a condition that the FSMA should be given a 10-day notification window for all mass campaigns.

All advertisements relating to digital currencies should contain a warning of the potential risks with an additional link for potential investors to glean further details. “Virtual currencies, real risks. The only guarantee in crypto is risk,” the warning template read.

“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,” FSMA Chairman Jean-Paul Servais said.

Apart from tighter advertising regulations, the FSMA has launched a nationwide sensitization for digital currencies, targeting a younger demographic using video lessons and quizzes. The campaign will be flagged off at Global Money Week, which will see key government officials in attendance.

The FSMA is reportedly working on the gamification of learning modules that will become operative for students in the country’s school system. To ensure that it will act within the scope of its powers, the FSMA has launched a public consultation and a study of the behavioral patterns of 1,000 investors.

The FSMA survey showed that the largest demographic investing in digital currencies is between 16-29, with 80% of investors being male. The FSMA remarked that investors’ sentiment was not swayed by the extended bear market nor by the collapse of the digital currency exchange FTX.

Placing a premium on advertisements

Around the world, regulators are looking at policing advertisements to insulate investors from the risks associated with digital currencies. The U.K.’s Advertising Standards Authority (ASA) has been clamping down on digital currency advertisements that fail to make the proper disclosures to the public.

In May 2022, the advertising watchdog issued an enforcement notice to over 50 firms with advertisements that failed to comply with the laid down guideline with the threat to report non-compliant ads to the Financial Conduct Authority (FCA).

Indonesia, Thailand, and the U.S. are beginning to impose stricter conditions for publishing digital currency adverts. Thailand’s Securities and Exchange Commission requires full disclosure on all ads including the amount paid to celebrities and influencers participating in the process.

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