On Wednesday, May 30, a draft legislation introducing favorable cryptocurrencies and Blockchain regulation received unanimous support in the Spanish Congress. The draft proposes to introduce blockchain and cryptocurrencies to Spanish market through “regulatory sandboxes” also known as “controlled testing environments.”
While the move by the Spanish lawmakers to regulate cryptocurrency and their underlying technology marks pro-crypto predispositions among the local politicians, the reforms are likely to face complications such as the recent overthrow of Prime Minister Mariano Rajoy and European Union Compliance laws.
Controlled Testing Environments
Cryptocurrencies are yet to be regulated in the country and are not deemed as legal currency since they are not issued by the Spanish government’s monetary authority. Nevertheless, Bitcoins and other cryptocurrencies are deemed as digital goods or things under the civil code , and transactions with bitcoins may be governed by the rules of barter contained in the Civil Code . Currently, Spanish Merchants who accept bitcoins and other cryptos are required to issue an invoice with value-added tax in euros.
Owing to the absence of a legal regulatory framework for cryptocurrencies in Spain, the draft calls for a review of regulations about digital currencies, as well as their underlying technology –Blockchain. The draft proposes to introduce the cryptos and Blockchain to the Spanish market through “controlled testing environments,” commonly referred to as “regulatory sandboxes.”
The “controlled testing environments” will apparently aid in promoting fintech startups- one of the main areas discussed by Spanish Congress on 30th may.
Notably, Marta Plana, the president of Floro Fintech commented: “A company cannot wait years for the law to regulate its new activity, but at the same time it has to be sure that it will not be sanctioned for innovating even if its developments are unknown at the moment.”
Spain’s move seems to be inspired by the United Kingdom Success with fintech regulatory sandbox. Earlier this year, UK’s Financial Conduct Authority (FCA) launched global regulatory sandbox, after the successful 2016 release of a UK sandbox. Reportedly, since 2016, UK has approved around 80 licenses, and more than 250 companies have tested their businesses in the fintech-boosting zone. Following the same path, Belarus has shown similar tendencies by creating the so-called High-Tech Park (HTP), which offers some benefits to attract fintech professionals from around the world.
The Congress roots for promoting the advantages of the Blockchain technology, including cost savings through the eradication of intermediaries in payments and transfers and the benefits it offers when it comes to raising capital, especially for startups.
The draft insists on reaching a common ground in regards to the use and the regulations of Cryptocurrency in EU level and also called on the Government to work with other EU nations and institutions to achieve that
The unanimously approved draft also highlights the pitfalls associated with Cryptocurrency related operations, bidding for “adequate dissemination of information about the risks” assumed by crypto investors. According to Spanish deputies, the approach will help to avoid “economic damages that are impossible to repair,” such as those linked to high-risk financial products.
Spain Political Unrest
Spain move to draft favorable rules for cryptocurrency-related operations comes around the same time as a political turmoil hits Spain. Prime Minister Mariano Rajoy of Spain on Friday was axed from office after a bruising debate and a no-confidence vote in the Spanish parliament, brought on by a slush-monetary fund scandal swirling around his party.
As reported by CNBC, Mariano Rajoy departure could trigger another political turmoil in southern Europe, “further unnerving financial markets already wrong-footed by failed attempts to form a government in Italy three months after a national election.”
La Vanguardia, a Spanish local news outlet pointed out that the ouster of Rajoy could delay the pro-crypto reform. According to the local news outlet, the pro-crypto draft was open to public consultation until June 7, and the final text slated to be reviewed around July 7th.