It is all too obvious the impact cryptocurrency use implicates for future economy. At its beginning, skepticism was the norm when acknowledging this technology, but now many banks, companies and investors are starting to take it very seriously, further accommodating themselves to the demands of a fast-paced market. But of course, these are not the only submerging into this world, cryptocurrency has also caught the legislator’s eye. The benefits of anonymity that come along with blockchain technology regarding the holding and transaction of virtual currency, though favorable in many ways, also causes concern due to its association with possible money laundering and criminal activity. It is alarming to see how only a week ago, the Twitter accounts of some of the most influential figures in the world, such as Elon Musk and Bill Gates, where hacked to trick users into making Bitcoin transactions equivalent to 1.000 US dollars, with the promise of getting back twice their contribution. In the course of just an hour, the scam translated to 100.000 stolen US dollars in Bitcoin. There’s no denying Blockchain technology proved itself exceedingly serviceable to these thieves, since it will be hardly impossible to trace the money back to them. The EU perceives such scandals are bound to increase, unless regulators engage into action.
Taking this into consideration, a Draft Bill is on the pipeline for the purpose of transposing the Anti-Money Laundering Directive (EU) 2018/843 (AMLD5) into Spanish national Law, and it will enter into force the day after its publication in the National Gazette, expected on the second semester of 2020.
One of the interesting facts about the upcoming Act is that, for the first time, an official definition for virtual assets will be offered by Spanish legislation. Previously, the consideration to these assets in Spain was limited to the jurisprudential scope of the Supreme Court’s decision Nº 326/2019 of June 20th, 2019, through which the criminal chamber defined them as “intangible assets of exchange…”, that, in no way, do they have the legal consideration of money. Through the transposition of the aforementioned Directive, the legislator solidifies the Supreme Court’s insight, strengthening their approach and consolidating a definition for virtual assets as a source of Spanish law, by stating they are a “digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically”.
Additionally, the upcoming Act understands that one of the most essential characteristics surrounding virtual currencies is their anonymity, which incentivizes their use for criminal activity. In addition to that, providers offering exchange services between virtual currencies and fiat currencies (that is to say coins and banknotes that are designated as legal tender and electronic money, of a country, accepted as a way of exchange in the issuing country) as well as custodian wallet providers are currently under no EU obligation to identify suspicious activity. Therefore, terrorist groups and other criminal subjects may be able to transfer money into the EU financial system without any resistance. Consequently, the aforementioned businesses will be subjected to the dispositions contained in this new Act, which will change certain formality aspects required for them to duly operate within Spain, mainly consisting on the following:
The EU aim is to create and maintain a central data base accessible for SEPBLAC where virtual wallets and identities of the users will be registered. A first report is expected to be published before January 11th, 2022, accompanied by legislative proposals regarding virtual currencies.
With that said, it is safe to say that, though slow in the process, Spain is taking a consistent approach in the creation of legal parameters to contain the criminal use of virtual assets. This way they can keep pace -at a global scale- as a trade mark regulator in the face of the unpredictable and complex world of cryptocurrencies. The use of these assets is already a commonality and the consequences (positive or bad) lurk in the shadows. We can certainly expect sooner than later an EU regulation of direct application, focused in its entirety to the trade of virtual currencies. Businesses and users involved must be on the watch. It is only a matter of time.