1.  How is crypto regulated?
  2. What are the steps taken by the regulator to adopt MiCAR? 
  3. Are the following activities regulated or unregulated in your jurisdiction? ― Direct sales of tokens by issuers— Exchange (buy/sell) ― Custody (hold) ― Borrowing/lending ― Yield/staking services— Staking on proof of stake consensus mechanisms (please indicate if NFTs are treated differently from fungible cryptoassets for each activity)
  4. Can offshore business provide services to local customers on either active solicitation or reverse solicitation basis? 
  5. How long would establishing a cryptoasset business/obtaining a license in your jurisdiction take?
  6. What would be the approximate overall cost of obtaining a licence?
  7. What is the probability (%) of success in obtaining a licence?
  8. What other limitations are there in your jurisdiction when looking to set up a cryptoasset business? E.g., Compliance requirements and physical presence

jurisdiction

Spain

Disclaimer: This chapter was last updated on 3rd May 2024 and does not reflect any subsequent developments. The information provided is intended for general informational purposes and should not be construed as legal advice.

1. How is crypto regulated?

AML RegulationAny other regulation

The Fifth Money Laundering Directive (5MLD) was transposed into Spanish Law through Royal Decree-Law 7/2021, of 27 April (RD-Law 7/2021).

Such RD-Law 7/2021 also introduced the most relevant amendments on Law 10/2010 of 28 April 2010 on the prevention of money laundering and terrorist financing (Law 10/2010) including as obliged entities the exchanges of virtual currency for fiat and e-wallet custodian service providers.

Security tokens: Spanish Law 6/2023 of 17 March on Securities Markets and Investment Services ("LMVSI").

Tax: Law 11/2021, of July 9, on measures to prevent and combat tax fraud, transposing Council Directive (EU) 2016/1164, of July 12, 2016, establishing rules against tax avoidance practices that directly affect the functioning of the internal market, amending various tax and gambling regulation rules which incorporates the Thirteenth Additional Provision to Law 35/2006, of November 28, 2006, on Personal Income Tax and partially amending the laws on Corporate Income Tax, Non-Resident Income Tax and Wealth Tax requiring the reporting of balances in virtual currencies on an annual basis.

2. What are the steps taken by the regulator to adopt MiCAR? 

The Spanish regulator has not taken any steps to adopt MiCAR in terms of the authorisation process for token issuers or VASPs.

The only reference to MiCA in Spanish legislation is found in Law 6/2023, which includes a sanctioning regime for non-compliance with MiCA regulation obligations.

3. Are the following activities regulated or unregulated in your jurisdiction? ― Direct sales of tokens by issuers— Exchange (buy/sell) ― Custody (hold) ― Borrowing/lending ― Yield/staking services— Staking on proof of stake consensus mechanisms (please indicate if NFTs are treated differently from fungible cryptoassets for each activity)

AML RegulationAny other regulation

Law 10/2010 requires registration under the Bank of Spain to provide the following services:

  • Virtual currencies for fiat currency exchange; and
  • Custody of virtual currencies 

Virtual currencies are defined in Law 10/2010 as a digital representation of value not issued or guaranteed by a central bank or public authority, which does not have the legal status of currency or money but is accepted as a medium of exchange and can be transferred, stored or traded electronically. Therefore, under Bank of Spain criteria crypto-assets are virtual currencies. 

 

For that all, the VASPs performing exchange and custody activities shall be registered in the “Special Registry of exchange of virtual currency for fiat currency and electronic wallet custodian service providers”, that is under supervision of the Bank of Spain, in accordance with additional disposition two of Law 10/2010 on AML. 

However (i) Direct sales of tokens by issuers (considered as P2P transactions); (ii) Borrowing and lending; (iii) Yield and staking services; and (iv) Staking on proof of stake consensus mechanisms are unregulated activities in Spain.

Regarding NFTs, they are not considered virtual currencies under Law 10/2010 and consequently their exchange and/or custody are unregulated activities under Spanish Law.

Security tokens: Security tokens are considered financial instruments and therefore the Spanish and European financial markets regulation shall apply in the performance of such activities.

 

The approval and publication of the LMVSI meant: (i) the inclusion of Distributed Ledger Technology ("DLT") as a valid system for the issuance, registration, transfer or custody of financial instruments; (ii) introduction of aspects related to MiCAR and the advertising of crypto-assets; and (iii) the supervisory and sanctioning regime of the crypto-asset market.

4. Can offshore business provide services to local customers on either active solicitation or reverse solicitation basis? 

AML RegulationAny other regulation

 

Regarding regulated activities: the second additional provision of Law 10/2010, in its paragraph 1, establishes that VASP which carry out the exchange of virtual currencies for fiat currencies and/or the custody of those assets shall be registered in the Register of the Bank of Spain (emphasis added):

“Natural or legal persons who, whatever their nationality, offer or provide in Spain services of those described in sections 6 and 7 of article 1 of the law, must be registered in the register set up for this purpose at the Bank of Spain” 

For that all, it is not possible to provide these regulated services for Spanish residents without the required registration under the Bank of Spain and, therefore, offshore business not registered cannot provide those services on active solicitation nor reverse solicitation basis. 

Security tokens: MiFID II requirements apply for reverse solicitation of entities outside the EU. 

Upmost, the LMVSI allows investment firms authorized in another Member State to act in Spain under the Freedom to Provide Services, so a firm registered outside Spain can provide services on an active solicitation as long as it applies to its regulator to be passported to Spain.

5. How long would establishing a cryptoasset business/obtaining a license in your jurisdiction take?

AML RegulationAny other regulation

Please refer to article 63 of MiCA Regulation in relation to the assessment of the application for authorisation and grant or refusal of authorisation.

The establishment of a cryptoasset business/obtaining a licence in Spain will depend on the type of activity intended to be carried out and will depend on several other factors, therefore, it shall be determined on a case-by-case basis. 

Please see AML Regulation column. 

6. What would be the approximate overall cost of obtaining a licence?

AML RegulationAny other regulation

Please consider our previous answers.

The cost of registration will depend on the type of activity intended to be carried out and will depend on the level of development the entity already has in terms of AML and the effort required to adapt it.

Additionally, the CNMV has not yet made public the fees for the authorization of CASP. 

Please see AML Regulation column. 

7. What is the probability (%) of success in obtaining a licence?

AML RegulationAny other regulation

Please consider our previous answers.

The likelihood of success will be dependent on the type of activity intended to be performed. 

This shall be considered on a case-by-case basis, as depending on the characteristics and the activities to be performed, the success factor could vary. 

Please see AML Regulation column. 

8. What other limitations are there in your jurisdiction when looking to set up a cryptoasset business? E.g., Compliance requirements and physical presence

AML RegulationAny other regulation
To date, the Spanish regulator has not published any additional limitations to those contained in MiCA.

Financial Service Regulation. Advertising of cryptoassets:

Spanish National Securities Market Commission (CNMV) Circular 1/2022, relating to the advertising of cryptoassets presented as investments defines the objective and subjective scope of cryptoasset advertising, establishes the criteria to be followed when promoting these assets, and provides for a supervisory regime including prior notification of such advertising activity.

All advertising of cryptoassets made by a natural or legal person to investors, including potential investors, in Spain in which such assets are implicitly or explicitly offered or marketed as an investment are subject to this Circular. 

This is presumed to be the case when the purchase of cryptoassets is promoted, or where reference is made to current or future profitability, price or value of such cryptoassets, suggesting them to be an investment opportunity, even when they can be used as a medium of exchange.

Certain advertising activities are excluded from the scope of the Circular, such as the advertising of cryptoassets (i) that cannot be, due to their nature, the object of investment, (ii) that are considered financial instruments, (iii) that are considered as utility tokens, and provided that no revaluation expectations are offered and where the volume and conditions offered are consistent with the inherent rights associated with the cryptoasset in question, (iv) that are considered as NFTs which are not offered as a mere investment. 

The Circular also does not apply to (i) white papers of new cryptoasset issuances, (ii) corporate advertising campaigns with generic information about the cryptoasset provider, including sports sponsorships, (iii) presentations to analysts or institutional investors; (iv) independent analyst publications that are not sponsored or promoted; and (v) advertising for cryptoasset courses or workshops that encourage investment in cryptoassets and are not offered free of charge or for a symbolic price. 

The CNMV will carry out an ex-post control, excluding mass advertising campaigns (those aimed at more than 100,000 people through any advertising medium) which will be subject to ex-ante supervision, with the CNMV requiring at least ten working days prior notification of the campaign before it is launched. 

Implications of the use of DLT in securities markets:

The LMVSI brings relevant developments to promote the use of DLT or other similar technologies for the issuance, registration, transfer or administration of all financial instruments, as it is set out in Article 2.1 of the LMVSI. 

In particular, DLT-based systems will have to: 

  • Ensure the integrity and immutability of the emissions that take place within them;
  • Directly and indirectly identify the holders of rights in tradable securities; and
  • Determine the nature, characteristics and number of the securities.

Moreover, Security Token Offerings ("STOs") can be carried out without a prospectus, if they comply with the requirements set forth in the LMVSI. However, as a new feature of the LMVSI, in cases where transferable securities are represented by DLT-based systems, it will always be necessary to determine which entity is responsible for the administration of the registration and registration of securities represented by DLT. 

Changes to the crypto-asset market

The LMVSI includes a new sanctions regime which includes serious infringements through an express reference to the regime of sanctions relating to cryptoassets included in MiCA. Therefore, the LMVSI directly applies MiCA with regards to the sanction regime.

In addition, the LMVSI extended the scope of action of the Spanish National Securities Market Commission ("CNMV") in this market. Thus, Article 247 of the LMVSI establishes that the CNMV may subject to authorisation and control the advertising of cryptoassets presented as investment objects which, as they are not considered tradable securities, could be excluded from the activities contained in this law.

Nevertheless, according to the LMVSI, the Bank of Spain will exercise the supervision, inspection, and sanctioning functions in relation to the obligations laid down in MiCA regarding issuers of electronic money tokens and asset-referred tokens.