Spanish banks are eager to offer crypto, but when will the central bank oblige

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Span­ish banks are now inter­est­ed in test­ing cryp­to waters as they await reg­u­la­to­ry clar­i­ty from the cen­tral bank, accord­ing to local media reports.

The Bank of Spain had announced ear­li­er in June that it will release reg­is­tra­tion instruc­tions for cryp­to-exchanges and cus­tody plat­forms by 29 Octo­ber. How­ev­er, the super­vi­sor has not released any doc­u­ment yet.

Once the cen­tral bank releas­es a cryp­to-reg­istry, com­pa­nies will have the oppor­tu­ni­ty to reg­is­ter until 29 Jan­u­ary 2022, as per the pre­vi­ous cir­cu­lar. Mean­while, Span­ish banks are tak­ing time to explore the pos­si­bil­i­ty of offer­ing cryp­to-assets direct­ly to their customers.

In fact, reports sug­gest that large finan­cial insti­tu­tions are using their com­pli­ance depart­ments to find out if they require reg­is­tra­tion to offer cryp­to-relat­ed services.

Since the reg­istry was part of a tight­en­ing pol­i­cy around the Pre­ven­tion of Mon­ey Laun­der­ing and Ter­ror­ism Financ­ing, banks are con­fused if insti­tu­tions that are already super­vised require list­ing. For exam­ple, BBVA, a pri­vate bank in Switzer­land, opened Bit­coin trad­ing ser­vices to its clients in June itself.

Legal sources cit­ed in the report claim that it is dif­fi­cult for the “reg­u­la­tions to be ready before the end of the year,” and the approval may stretch until ear­ly next year.

This may be so because the reg­u­la­tions comes under the MiCA (Mar­kets in cryp­to-assets) frame­work. And, the reg­istry will be inter­con­nect­ed with reg­istries from oth­er Euro­pean Union countries.

Glo­ria Hernán­dez Aler, a part­ner at the reg­u­la­to­ry advi­so­ry firm finReg360, was one to point out,

“It would not make sense for a bank to have to go through the require­ments of good repute imposed by the norm, since these enti­ties are already direct­ly supervised.”

How­ev­er, Aler also added that a noti­fi­ca­tion to the reg­u­la­tor might be required if banks extend their exist­ing frame­work to dig­i­tal assets.

Mean­while, cryp­tocur­ren­cies in Spain large­ly remain unreg­u­lat­ed. In fact, author­i­ties had pre­vi­ous­ly cau­tioned investors about the asset class too. Cit­ing the inher­ent risk of cryp­to, author­i­ties had not­ed that they do “not have the pro­tec­tion offered by tra­di­tion­al pay­ment sys­tems against a default by the counterparty.”

How­ev­er, on the back of greater cryp­to-adop­tion, sev­er­al amend­ments are in the works. It is note­wor­thy  that indus­try inter­est in cryp­to has peaked after a recent Bank of Amer­i­ca report found that cryp­to “could com­plete­ly form a new class of assets.”

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