Bank of Spain’s new register for virtual currency exchange and custodian wallet providers now fully up and running

Last October, the register for providers engaged in exchange services between virtual and fiat currencies and custodian wallet providers was put in place. This register was required in additional provision two of Law 10/2010, introduced by Royal Decree-Law 7/2021, of April 27, 2021.

Individuals or legal entities need to be registered where the supply of virtual currency exchange services or custodian wallet services, the establishment or the management of their services are in Spain, no matter where the customers for their services are located. There is also a requirement to register both providers not under the supervision of a competent authority, along with regulated institutions that provide these services and are already registered on government registers kept by the competent authority.

The registration of legal entities must be done electronically through the Bank of Spain’s electronic register, using any of the authentication systems that are accepted by the Bank of Spain.

To be entered on the register, the necessary forms have to be filed together with the other documents required. The features of this process are:

• There are specific forms to be completed for each type of service, exchange or custodian wallet: CRIPTO01 (virtual currency exchange activities) or form CRIPTO03 (custodian services).
• In both cases form CRIPTO05 has to be completed, relating to the statement of commercial and professional good repute, for both the applicant, and if applicable, for the individuals actually managing the institution.
• And together with the forms, they have to submit: a no-criminal-record certificate; identity documents; anti-money laundering and counter-terrorist financing manual; and risk self-assessment.

After taking part in these registration procedures, our firm has determined that the registration process has the following participants:

• the Bank of Spain, which will supervise the registration obligation, along with the suitability of the applicant and of its managing body, through good repute questionnaires, which will be accompanied by a no-criminal-record certificate;
• And Sepblac, which will be responsible for a detailed review of the AML/CTF procedures filed and the risk assessment, paying particular attention to the flows of funds. Importantly, Sepblac’s approval is required to be properly registered on the register.

In needs to be noted from a practical standpoint that the Bank of Spain has three months to issue a decision in the procedure and therefore to carry out the registration of the entity or individual. That said, the Bank of Spain usually sends out requests for additional information which halt the procedure, making it last longer than 3 months.

Besides, in our view it is crucial to start the process as soon as possible, because Royal Decree-Law 7/2021, of April 27, 2021 allowed nine months from the day it came into force in which to register any crypto service providers already operating in Spain on its entry into force, which means that these entities or individuals required to be entered on the Bank of Spain’s cryptocurrency register only had until January 29 to fulfill their obligation without becoming liable to a penalty. We have seen that a large number of applications for registration were filed in the final weeks of 2021 and so far in 2022.