Today, April 28, 2021, the Spanish National Gazette has published the Royal Decree 7/2021, of April 27, for the transposition of the EU directives on the areas of competition, prevention of money laundering, credit institutions, telecommunications, tax measures, prevention and remediation of environmental damage, posting of workers in the provision of transactional services and consumer protection.
This Royal Decree will modify the Law 10/2010, of April 28, for the Prevention of Money Laundering and Financing of Terrorism (hereinafter, the “Law 10/2010”) in the following ways:
The following definitions were incorporated within article 1 of Law 10/2010:
a) Virtual Currency: “Virtual Currency means any digital representation of value not issued by a central bank or public authority, which is not necessarily associated to an established legal tender and does not possess the legal status of currency or money, but is accepted as medium of exchange and can be transferred, stored or electronically negotiated”.
b) Virtual Currency exchange for Fiat Currency: means “the purchase and sale of virtual currency by delivery or receipt of euros or any other foreign legal tender or electronic money accepted as a means of payment in the issuing country”.
c) Services for the custody of electronic wallets: means “those individuals or entities that provide services pertaining to the safeguard or custody of private cryptographic keys on behalf of their customers, for the holding, storage and transfer of virtual currency”.
NEW REGULATED ENTITIES:
New regulated entities were included within article 2 of the Law 10/2010. Among these entities, the “providers of services regarding the exchange between virtual and fiat currency, and the custody of virtual wallets” can be found in section z) of article 2 (hereinafter, “Virtual Currency Service Providers”).
Virtual Currency Service Providers will now have to comply with the following provisions:
1. Regardless of their nationality, if the services pointed out in definitions “B” and “C” mentioned above are offered or provided in Spanish territory, these individuals or entities will have to be registered within the Registry of the Spanish Central Bank (hereinafter, the “SCB”) created for these purposes.
2. Likewise, the following must also register within the SCB Registry:
a) Regardless of their nationality, those individuals or entities that provide the aforementioned services, when the address, administration or management of these activities reside in Spain, regardless of the location of the service recipients.
b) The entities located in Spain that provide these services, regardless of the location of the service recipients.
3. The registration within the SCB Registry will be conditioned to the existence of:
a) Adequate anti money-laundering prevention procedures, provided by Law 10/2010 (Identification of clients, communications to SEPBLAC, internal control measures, etc.).
b) Compliance with the requirements of commercial and professional honorability, according to the terms established in Article 30 of Royal Decree 84/2015, of February 13th, for the development of Law 10/2014, of June 26, on the regulation, supervision and solvency of credit institutions. In summary, these requirements consist on displaying personal, business and professional conducts that do not cast doubt on the ability to perform a sound and prudent management of the Entity.
c) The SCB will have authority to supervise the compliance of the aforementioned requirements.
It is important to highlight that if Virtual Currency Service Providers do not comply with the required registration mentioned above, such conduct could be considered a very serious infringement of Spanish Law, and the entity or individual, will be subject to sanctions imposed by the SCB. The infringement will be considered “serious” and not “very serious” only if the provided services were occasional or isolated.
The SCB has a period of 6 months for the registry for Virtual Currency Service Providers to start functioning, counting from the date of entry into force of the Royal Decree 7/2021.
If the services mentioned in definitions “b)” and “c)” are provided to residents in Spain, then the Virtual Currency Service Provider will have a period of 9 months counting from the date of entry into force of Royal Decree 7/2021 in order to register.
The entry into force of this Royal Decree will begin tomorrow April 29th, 2021, for which the registration, according to the aforementioned, will begin in the following dates:
a. 6-months for the registry to start functioning: October 29th, 2021.
b. 9-months for the Virtual Currency Service Provider to register: January 29th, 2022.
Fintech and Blockchain Department
ALFONSO LÓPEZ-IBOR ALIÑO / OLIVIA LÓPEZ-IBOR JAUME / ALEJANDRO ANDRÉS SOSA RÖHL
Madrid, April 28, 2021.