Spanish laws allow for direct crypto investments, regulators confirm

The National Securities Market Commission in Spain (CNMV) has clarified its position on registered funds investing directly in cryptocurrencies.

The clarification was made in response to a question addressed to fintech companies. The question regarded whether a fund registered by the Comision Nacional del Mercado de Valore (CNMV) can directly invest in cryptocurrencies.

In the response to the question, CNMV stated that these types of funds are allowed by Law 22/2014 to make investments in cryptocurrencies. According to Law 22/2014, investing in cryptocurrencies can be done through closed-end collective investment entities (EICC), closed-end investment funds (FICC) and closed-end investment companies (SICC).

Despite the provisions allowing direct investments in cryptocurrencies, there are various regulations to be followed. In addition, direct investment raises problematic issues like compliance with the set law regarding the valuation of assets, management of liquidity as well as the custody guarantee.

The law provides certain requirements to be met by EICC, FICC, and SICC. In Article 2.1 of Law 22/2014, EICC fund divestments must “occur simultaneously for all investors or participants,” and investors must receive funds “based on the rights that correspond to each one of them,” following the rules for each class of shares or participations.

The law also stipulates that a management company with the proper authority must manage an FICC registered with the commission before it can make cryptocurrency-related investments. This can be done by a management company like the closed-end type collective investment entities (SGEIC) or a collective investment institution management company (SGIIC). The commission in their statement also made it clear that it does not have the mandate to supervise both FICC and SICC. However, if the SICC is self-made, the commission could supervise its activities as provided for under article 85 of Law 22/2014.

The general director of Strategic Policy and International Affairs, Victor Rodriguez, reported to local news agencies that CNMV’s move to regulate securities was due to lack of international and European regulations. According to Europa Press, CNMV will continue to regulate securities investments in cryptocurrency until a regulatory body is created in Europe.