Crypto-assets regulation in Spain and MiCAR

The EU legislator's adoption of the Market in Crypto-Assets Regulation ("MiCAR") has followed discussions with regulators and stakeholders, as it was necessary to reach an international consensus and harmonise legislation for those involved in crypto-assets.

Regulation in Spain

In Spain, crypto-assets which cannot be considered as financial instruments have not had their own specific regulation (for the purposes of this brief introduction, “unregulated crypto-assets"). Spanish authorities gradually approached these unregulated crypto-assets by publishing a series of documents and partial regulations.

• These include the Spanish stock market regulator ("CNMV") publication of several documents together with the Bank of Spain to warn about the risks regarding unregulated crypto-assets.
• Also, as a result of the implementation of the Fifth Anti-Money Laundering Directive in Spain, providers of services for the exchange between virtual and fiat currency and the custody of virtual wallets need to register with the registry of the Bank of Spain.
• In relation to the advertising of crypto-assets, CNMV issued Circular 1/2022, of 10 January, to provide a set of rules applicable to any advertising of crypto-assets presented as investment objects which is aimed at the Spanish market.
• Moreover, the Spanish Securities Market Act was recently modified to pave the way for the application of MiCAR in Spain.

Unlike unregulated crypto-assets, the commercialisation and offering in Spain of crypto-assets that qualify as financial instruments has been subject to the provisions of the Spanish Securities Market Act. Also, on a separate note, non-fungible tokens (NFTs) have not had a specific regulation in Spain and they have been subject to the regulation that is applicable to their underlying asset (if any).

MiCAR

Scope of application

MiCAR does not apply to the offering or provision of services in relation to any digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology – that is, a crypto-asset. Among the exclusions provided for in MiCAR, it should be emphasised that MiCAR will not be applicable in relation to (i) crypto-assets that qualify as financial instruments under Markets in Financial Instruments Directive (MiFID) II (for example, security tokens), (ii) e-money (except for e-money tokens), (iii) crypto-assets that are regarded as deposits, structured deposits or securitisations and, (iv) certain insurance products.

It should be noted that crypto-assets that are unique and not interchangeable, such as NFTs, fall outside the scope of MiCAR as the legislator considers that their financial use is limited and thus carry less risks for their holders.

MiCAR applies to the following crypto-assets: (a) e-money tokens (EMTs), (b) asset referenced tokens (ARTs), and (c) crypto assets other than ARTs and EMTs (for example, utility tokens). The issuance and marketing of each type of crypto-asset will be subject to a different set of obligations. For example, the issuance may be subject to mere notification to the competent authorities or to actual authorisation requirements, in addition to the publication of the relevant crypto-asset white paper.

It is, therefore, important to categorise accurately the nature of the crypto-asset being offered. This will allow the identification of the applicable regulation (for example, MiCAR, financial services regulations) and the specific obligations to which the crypto-asset will be subject. For example, NFTs are outside the MiCAR’s scope of application as they are unique and non-fungible. However, to the extent that NFT's own characteristics or the characteristics associated with their use indicate otherwise – for example, being part of a wide series or collection – they will be subject to MiCAR’s obligations.

Crypto-asset services

Apart from issuers of crypto-assets, there are many other actors whose activities in relation to crypto-assets would be covered by MiCAR (crypto-asset service providers, or CASPs). These activities may include, but are not limited to, custody and / or exchange of crypto-assets, operation of a crypto-asset trading platform, or provision of advice re crypto-assets (“crypto-asset services”). The provision of crypto-assets services is generally subject to an authorisation requirement; i.e., CASPs should be authorised to provide crypto-asset services by the competent authorities of their home Member State.

Once authorised, CASPs that wish to provide crypto-asset services on a cross-border basis should apply for passporting. To do so, CASPs will need to submit to the competent authority of their home Member State -among other things- a list of Member States in which they intend to provide crypto-asset services, identifying which services they will be providing.

The passporting procedure envisaged in MiCAR is a very streamlined one when compared to other passporting procedures for financial regulated services, as the competent authority of the home Member State just needs to forward the relevant information to the listed host Member States, European Securities and Markets Authority, and the European Banking Authority. CASPs may then begin to provide crypto-asset services in host Member States from the date the authority of their home Member State confirms that the information has been forwarded or, at the latest, 15 calendar days from the submission of the relevant information to the authority of their home Member State.

MiCAR imposes several obligations on CASPs for providing crypto-asset services. Some of these obligations are of a generic nature; for example, to act honestly, fairly and professionally, or to warn investors about potential risks. However, there are other more stringent obligations such as minimum capital requirements that may vary from €50,000 to €150,000, depending on the type of the crypto-asset service provided.

MiCAR's impact on CASPs in Spain

It is important to emphasise that the authorisation to operate as a CASP under MiCAR is a different and distinct regulatory requirement than that to register with the Bank of Spain for AML purposes. CASPs registered with the Bank of Spain for AML purposes will need to seek a MiCAR authorisation, and new CASPs will also need to register with the Bank of Spain for AML purposes.

As far as CASPs complying with Circular 1/2022 in relation to advertising are concerned, they will not need to further adjust their advertising practices due to MiCAR. In particular, we should note that Annex I of Circular 1/2022 includes specific transparency requirements in line with MiCAR.

MiCAR will generally apply from 30 December 2024, including the requirements applicable to CASPs (for example, to seek an authorisation). However, the requirements that are applicable to issuers of ARTs or EMTs will apply from 30 June 2024.