Spain’s financial regulator has clarified its position on regulated investment funds investing directly in cryptocurrencies. These type of funds are legal under Law 22/2014, and investments can be made through three types of legal entities.
Funds Directly Investing in Cryptocurrencies
Spain’s National Securities Market Commission (CNMV – Comisión Nacional del Mercado de Valores) recently clarified its position on registered funds investing in cryptocurrencies directly. The CNMV is the Spanish government agency responsible for regulating the securities markets.
In a Questions and Answers document addressed to fintech companies on activities and services that can have a relationship with the Commission, one of the questions was “Can a fund registered by the CNMV directly invest in cryptocurrencies?” The Commission replied:
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.
Law 22/2014 establishes, among others, closed-end collective investment entities (EICC), closed-end investment funds (FICC), and closed-end investment companies (SICC), Iclg describes.
EICC, FICC, or SICC
The CNMV explained that the investments could be made through EICC, FICC, or SICC.
For EICC, Article 2.1 of the above law mandates that “the divestment policy of its participants or partners” must meet two requirements. Firstly, the fund’s “disinvestments [must] occur simultaneously for all investors or participants,” the Commission detailed. Secondly, “what is received by each investor or participant is based on the rights that correspond to each one of them, according to the established terms in its bylaws or regulations for each class of shares or participations.”
Both FICC and SICC have their own “numerous requirements and conditions,” the CNMV noted. For example, an FICC registered with the Commission must be “managed by a management company of closed-end type collective investment entities (SGEIC) or by a collective investment institution management company (SGIIC) that is authorized to manage this type of funds.” The Commission also noted that “the FICC and the SICC are not subject to the supervision of the CNMV (except [for] self-managed SICC)” based on the provisions of article 85 of Law 22/2014.
While registered funds can theoretically invest in cryptocurrencies directly, the Commission emphasized that there are many factors to consider, reiterating:
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.
Europa Press reported earlier this month that the CNMV “will apply [its] securities regulations to cryptocurrencies until there is European regulation.” The news outlet 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.