Spain’s Regulatory Body Open for Funds Investing in Digital Currencies
Spain’s National Securities Market Commission (CNMV – Comisión Nacional del Mercado de Valores) - an agency responsible for regulating the country’s security market has now clarified on its position whether registered funds should be allowed to directly invest in digital currencies.
In a Q&A document addressed by the agency to fintech companies operating in the country, one of the questions that appeared was “Can a fund registered by the CNMV directly invest in cryptocurrencies?”
Replying to this, the commission said: “This type of funds would have a legal place in Law 22/2014, which regulates, in addition to venture capital entities, other collective investment entities of closed type and their management entities.”
The commission further added that the investments can be made through closed-end collective investment entities (EICC), closed-end investment funds (FICC), and closed-end investment companies (SICC).
The commission further detailed each of three gateways that allow registered funds to delve in the cryptocurrency markets. In addition, the commission said that there are other factors as well that are to be considered, emphasizing that “The investment of FICC and SICC in cryptocurrencies raises a series of practical problems on how to comply with the regulations regarding the valuation of assets, the management of liquidity and the custody guarantee.”
Earlier this month, a local publication Europa Press reported that the CNMV “will apply [its] securities regulations to cryptocurrencies until there is European regulation.” The publication quoted CNMV’s general director of Strategic Policy and International Affairs, Víctor Rodríguez, saying: “The approach adopted by the CNMV is to try to apply the existing securities regulations as long as we do not have an international or European reference standard.”
Additionally, according to the latest report coming from the Europa Press Financial, the governor of Spain’s central bank - Luis María Linde - said that although he is in favour of the blockchain technology, he is against the risks posed by virtual digital currencies.
Linde further said that the push towards a decentralized digital economy will require proper regulations to foster innovation without bringing the risks beyond “reasonable limits:” He further added that “The move to a more digital economy is accompanied by greater cyber threats and it is necessary to develop new measures to protect processes, assets and customer data.”
Linde believes that digital currencies presently have more risks than benefits. He called cryptocurrencies to be “spurious novelties that do not provide significant improvements and should be tackled as soon as possible:”
“They have low acceptance as a means of payment, suffer extreme volatility, present multiple operational vulnerabilities and have been related to fraudulent or illicit activities in many cases.”