Following the consultation made by the BAS on November 16, 2021 to the CNMV on the regulation of exchanges in Spain, we analyze their response.
One of the concerns of our associates is to be classified by the CNMV as a “financial chiringuito“. Hence our consultation.
Absence of regulation, and therefore outside the CNMV’s jurisdiction
The CNMV expressly recognizes that this type of platforms are not subject to its jurisdiction. Specifically, the referred report, dated December 14, 2021 states: “in relation to cryptocurrency exchanges, there is currently no specific regulation on the so-called exchanges or trading platforms of cryptocurrencies or other cryptoassets or their activity. Platforms where only cryptoassets that are not considered financial instruments, such as cryptocurrencies, are traded would not be subject to the scope of supervision of the CNMV”.
Platforms with Security Token Offering subject to the CNMV
But to the extent that the cryptoassets with respect to which these platforms carry out intermediation or trading activities in Spain can be considered financial instruments (in accordance with Article 2 of the revised text of the Securities Market Law), the securities market regulations would apply to them. This would be the case of Security Token Offerings. In other words, tokens, which grant, in general terms, rights over the company.
Consequently, they should have the required authorizations to carry out their activity, if necessary as a trading venue (as a regulated market, multilateral trading system or organized trading system) or as an investment services company (ESI) or credit institution operating as a systematic internalizer. The management of the trading venue should be carried out by an ESI or by a market operator, and would generally be subject to market regulations and the CNMV’s supervisory scope.
Money laundering regulation
“However, at the very least, money laundering prevention regulations should apply to these types of platforms,” says the CNMV.
We now recall that those who provide these services, in Spain, must comply with AML/KYC obligations in relation to money laundering:
Those who provide the service of exchange of virtual currency for fiat currency, the sale of virtual currencies through the delivery or receipt of euros or any other foreign currency of legal tender or electronic money accepted as a means of payment in the country in which it has been issued.
Electronic wallet custody service providers. Specifically those individuals or entities that provide private cryptographic key safekeeping or custody services on behalf of their clients for the holding, storage and transfer of virtual currencies.
Being listed as a financial racket
On the other hand, in relation to the list of “other entities” collected on the CNMV website, as expressly stated therein, it is intended to inform the market of the existence “of entities that do not have any type of authorization or are not registered for any purpose with the CNMV and that could be carrying out some type of fund raising activity or providing any service of a financial nature. The list is not exhaustive and derives mainly from search and analysis exercises on the internet and social networks. Inclusion on the list does not imply any pronouncement on the conformity or non-conformity with current regulations of the possible activity of the corresponding entities.”
Purpose of the list of financial “chiringuitos”
The inclusion in the aforementioned list is only intended to inform investors that these are entities not supervised by the CNMV that carry out activities of attracting savings from the public through advertising, which could be confused with the activities of attracting public savings typical of the securities markets, causing the erroneous belief among investors that they are under the supervisory umbrella of the National Securities Market Commission, which is the reason for such inclusion, However, in no case does it prove that the aforementioned companies are carrying out illicit activities; on the contrary, it is simply a matter of informing the market that the entities included in said list are outside the scope of supervision of the CNMV, but they are included in the list to prevent investors from confusing them with those entities that are subject to the CNMV’s scope of action. 2 of the Securities Market Law (Texto refundidio aprobado porReal Decreto Legislativo 4/2015, de 23 de octubre, which entrusts the CNMV, among other functions, “the protection of investors, promoting as much information as necessary“.
Read CNMV’s complete answer on exchanges regulation in Spain:
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