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Since the European Commission published its Proposal for a Regulation on Markets in Crypto-assets, the regulations in this area have been constatnly changing. In recent months, we have seen great progress in regulating these assets in Spain. In this post, we examine the most significant developments:

Money laundering regulations

The reform of Act 10/2010 on Prevention of Money Laundering and Terrorist Financing under Royal Decree Law 7/2021 was published on April 28.

The reform was applied in view of the need to transpose the EU’s most recent Directive on preventing money laundering  and identifies the operators participating in the process of exchanging legal tender for crypto-currencies for the first time, as well as the entities that safeguard the cryptographic keys (known as “custodian wallet providers”).

Both operators are bound by the prevention regulations and must register with a registry created ad hoc. This registration is conditional on confirming the commercial and professional standing of their representatives and guaranteeing the obligations set out in money laundering regulations.

The Securities Market draft bill

The draft bill, published on May 7, includes crypto-assets issued using distributed registry technologies that meet the definition of financial instruments.

This amendment aims to clarify that the formula used to issue a financial instrument (centralized or decentralized) does not affect its legal nature.

The reform will not mean all crypto-assets are subject to the Securities Market Act. Those whose legal nature is not that of a financial instrument will not be. A large part of the crypto-assets not considered financial instruments will be subject to the future European Markets in Crypto-Assets Regulation (MiCA), discussed in this post.

The Spanish Securities and Exchange Commission (CNMV) publishes the Circular regulating crypo-assets advertising

Royal Decree Law 5/2021, of March 12, on extraordinary business solvency support measures in response to the COVID-19 pandemic amended Royal Legislative Decree 4/2015, of October 23, approving the consolidated text of the Securities Market Act to include a section 240 bis allowing the CNMV to oversee “advertising of crypto-assets or other assets and instruments presented as investment opportunities.

On June 14, the CNMV published the Proposed Circular on Crypto-Assets Advertising aiming to develop the application of section 240 bis of the Securities Market Act and establish the specific oversight the CNMV will apply to advertising on crypto-assets or other assets and instruments presented as investment opportunities.

Under the Proposed Circular, there is no need to issue a prior notice to the CNMV when advertising crypto-assets aimed at investors resident in Spain, except in the case of mass advertising campaigns or when the CNMV considers it necessary based on the impact that the advertising in question could have its target audience.

The public consultation period on the Proposed Circular closes on August 31, and input is welcome until then.

The European Data Protection Board states its position on the privacy and data protection aspects of a possible digital euro

In recent months, the European Central Bank has announced an investigation on a possible digital euro to supplement cash. In view of the impact that a digital euro would have on the personal data of EU residents, the European Data Protection Board (“EDPB”) has analyzed the data protection risks to be considered in this project.

The EDPB has underlined that a very high level of privacy and data protection is vital to foster confidence in end users and must be considered a distinctive element in the offer of a digital euro. Furthermore, the EBDP recommends that the EU body tasked with designing the project should conduct a data protection impact assessment.

The flurry of new regulatory policy lines on crypto-assets in recent months shows their growing importance in the national and international arenas.

Authors: Pedro Méndez de Vigo and Beatriz García Quiroga

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beatriz.garciaquiroga@cuatrecasas.com