We are getting closer and closer to a regulated digital market.
Royal Decree Law 7/2021, published on 28-4-2021, transposes Directive (EU) 2018/843 (Fifth Directive) by amending Law 10/2010 on the prevention of money laundering and terrorist financing (AML/CFT).
The transposition into Spanish law of the Fifth Directive on the prevention of money laundering and terrorist financing is important in the financial market because it incorporates definitions of great importance related to virtual assets, creates a specific register of service providers of these currencies (VASP – Virtual Asset Services Providers) and determines who are the providers that must register in it to provide these services.
With this enactment, a register of virtual asset service providers is created that regulates, for the first time in Spain, the activities of exchanging virtual currency for legal tender and the activity of virtual asset custody, which until now has been carried out through cryptocurrency exchanges or bureaux de change. From now on, these providers become obliged subjects of the AML/CFT regulations, and from the entry into force of this royal decree law they must comply with all the demands and requirements set out in these regulations.
This royal decree establishes definitions that will provide greater legal certainty, including the following:
- virtual currency: “a digital representation of value that is not issued or guaranteed by a central bank or public authority, is not necessarily associated with a legally established currency and 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”;
- exchange of virtual currency for fiat currency: “buying and selling of virtual currencies by giving or receiving euros or any other legal tender or electronic money accepted as a medium of exchange in the country where it is issued”; and
- e-wallet custodian service providers: “natural or legal persons providing safekeeping or custody services of private cryptographic keys on behalf of their customers for the holding, storage and transfer of virtual currencies”.
Creation of a register of providers of these services
The final text published includes the novelty of creating a register in which providers of certain related services must register.
The providers to be registered are
- natural or legal persons offering or providing the services of exchanging virtual currency for legal tender and virtual asset safekeeping wallet to residents in Spain.
- natural persons providing these services, where the basis, direction or management of these activities is in Spain, irrespective of the location of the recipients of the service.
- legal persons established in Spain providing these services, irrespective of the location of the recipients.
The preliminary draft law already provided for the creation of this new register and also included providers of virtual currency exchange services. However, the final text removes these providers from the obliged parties and maintains only providers of services for exchanging virtual currency for legal tender and virtual asset custody wallets resident in Spain.
Conditions for access and supervision
Access to the register will be conditional on the entities providing these services:
- have adequate procedures and bodies in place to comply with AML/CFT obligations, and
- comply with the requirements of commercial and professional honourability under the terms of Article 30 of Royal Decree 84/2015 of 13 February, which implements Law 10/2024 of 26 June, on the regulation, supervision and solvency of credit institutions.
The Banco de España will be the competent body to supervise the obligation to register and the conditions of commercial and professional good repute required for access and maintenance of registration.
The provision of these services without registration will constitute a very serious infringement of Law 10/2010, of 28 April, on the prevention of money laundering and the financing of terrorism, punishable by a fine of up to 10 million euros.
Deadline for registration
The register for these suppliers will come into operation within six months of the entry into force of this Royal Decree-Law, which will do so on the day following its publication in the BOE, without prejudice to the transitional periods it contains.
Individuals or legal entities providing any of the services described must register with the Banco de España within a maximum period of nine months from the entry into force of this Royal Decree-Law.
AddVANTE helps these types of entities that have not been regulated or registered to date, or those players who wish to provide their services as virtual asset service providers, to prepare this documentation and apply for registration with the Bank of Spain.