Further regulatory developments on crypto-assets in Spain

In our last post dated 16 April 2021 we mentioned that Spain had started to regulate advertising of crypto-assets. Over the course of the last month there have been very interesting developments in the crypto-asset landscape in Spain.

Firstly, Spain finally implemented the EU Fifth Anti-Money Laundering Directive (5AMLD) on 27 April 2021. As a consequence of the implementation of 5AMLD in Spain (i) providers engaged in exchange services between virtual currencies and fiduciary currencies; and (ii) custodian wallet providers, become subject to the Spanish AML regulatory framework. In addition, both crypto exchange providers and custodian wallet providers that offer their services to Spanish residents need to be registered with the Bank of Spain. It is relevant to mention that this requirement is applicable not only to Spanish crypto service providers, but also to foreign providers targeting their services to Spanish resident clients.

Secondly, the Spanish Ministry of Economic Affairs published a draft of new securities markets law on 4 May 2021. In such draft, in anticipation to the future EU framework on markets in crypto-assets (MiCA) as well as on the tokenisation of traditional financial assets and wider use of distributed ledger technology (DLT) in financial services, it is explicitly recognized that a financial instrument can be issued using DLT (i.e. security token).

Finally, the Spanish securities regulator, the CNMV, is providing further guidance in this field. On 7 May 2021, the CNMV updated its Q&A on funds and has included specific answers on the possibility of investments funds to have indirect exposure to cryptocurrencies. For hedge funds, such indirect exposure to cryptocurrencies can be through derivatives, provided that settlement does not entail delivery of the cryptocurrency. In any event, investment funds must include expressly specific information on the underlying investment in the prospectus and the KIID and an express and prominent mention of the exposure and the risks such investment may entail.