Spanish Lawmakers Propose Crypto Risk Warnings for Retail Investors

A group of Spanish lawmakers has proposed that the country’s financial top regulator, the National Securities Market Commission (CNMV), should mandate “traffic light”-style risk warnings for cryptoassets. This system aims to provide retail investors with a clear and visual indication of the type of asset they are purchasing. The proposal, sent by the Sumar group of MPs, highlights that a significant portion of tokens traded on crypto exchange platforms lack material backing or any underlying value.

The lawmakers also suggest renaming cryptoassets like Bitcoin and Ethereum to terms such as “crypto bets” or “unbacked assets.” They argue that these coins do not grant their owners any rights to tangible assets or have any connection to productive activities. The traffic light warning system would categorize cryptoassets into four risk levels: green for registered, supported, and supervised assets with stable market performance; yellow for assets with limited backing or moderate volatility; orange for unsupervised coins with high risk levels; and red for speculative assets with no identified issuer or material backing.

Sumar, a left-wing coalition comprising 20 parties, expressed concern over the concentration of wealth and the volatility generated by cryptoassets. Carlos Martín Urriza, the Sumar spokesperson for Economy and Finance, emphasized the need to protect retail investors from assets that are not backed by a verified asset or collateral. He noted that crypto trading often resembles betting more than investing and called for mandatory pre-purchase information and clear warnings for customers before they can buy coins.

The lawmakers also proposed specific regulations for algorithmic trading pools and restrictions on retail investors’ access to trading platforms that use AI or algorithms. Sumar, which has 31 lawmakers in the lower house, the Congress of Deputies, is part of Prime Minister Pedro Sánchez’s ruling coalition. This initiative comes as some of Spain’s largest banks have moved into the crypto sector, reflecting the growing popularity of coins in the region.