Introduction
A coalition of lawmakers in Spain is advocating for the country’s financial regulatory authority to implement a new system of risk warnings for cryptocurrencies, modeled on a “traffic light” concept. Members of the Sumar party have urged the National Securities Market Commission (CNMV) to adopt this labeling for products targeted at retail investors. This proposal aims to provide consumers with a more straightforward and visual method of assessing the assets they consider purchasing.
Concerns About Cryptocurrency
According to a report from the Spanish news agency EFE, Sumar presented a formal request to the CNMV, expressing concerns that many of the tokens available on cryptocurrency exchanges lack substantive backing and possess no intrinsic value. The lawmakers are also suggesting a rebranding of popular cryptocurrencies, like Bitcoin (BTC) and Ethereum (ETH), proposing terms such as “crypto bets” or “unbacked assets.” They argue that these digital currencies do not confer ownership rights to physical assets nor do they engage with any productive economic processes.
Proposed Risk Warning System
The proposed risk warning system would categorize each cryptocurrency available on exchanges or financial platforms under three distinct labels. Sumar’s members assert that cryptocurrencies often embody extreme forms of fictitious capital, which do not create genuine value but instead contribute to market volatility, inequality, and the concentration of wealth.
Statements from Lawmakers
Carlos Martín Urriza, spokesperson for Economy and Finance in Sumar, emphasized the need to shield retail investors from offerings that lack verified backing or collateral. He equated cryptocurrency trading more closely to wagering than genuine investing.
Additionally, Sumar insists that the CNMV should mandate banks and exchanges to ensure that customers review necessary warnings and informational materials prior to crypto purchases, irrespective of the classification of the tokens involved. It stresses that these alerts should feature prominent visual elements for clarity.
Recommendations for Implementation
To facilitate this initiative, Sumar recommends that the CNMV take inspiration from existing warning protocols in industries like gambling and tobacco, where risk is clearly communicated to consumers.
Call for Stricter Regulations
Moreover, Sumar has called for the introduction of stricter regulations governing algorithmic trading platforms, proposing limitations on retail investors’ access to trading systems driven by artificial intelligence or complex algorithms. Sumar, a coalition representing 20 left-wing parties, was formed in anticipation of the July 2023 general elections. While it lacks a presence in the Senate, the coalition holds 31 seats in the lower house, the Congress of Deputies, and is part of the ruling coalition led by Prime Minister Pedro Sánchez.
The call for regulation comes amid increasing interest from major Spanish banks in the cryptocurrency space as digital currencies gain traction across Spain’s financial landscape.
