Payment Services – FinTech
FinTech access to the Spanish National Electronic Clearing System (SNCE) is enabled.
On 16 December 2020 the new regulation on the SNCE entered into force; the main highlight that introduces is access, through a direct participant, to the SNCE by electronic money (e-money) and payment institutions.
The SNCE is the Spanish retail payment system managed by Iberpay (Sociedad Española de Sistemas de Pago), a private company whose shareholders are the credit institutions participating in the SNCE. The Bank of Spain is responsible for approving the rules of the system and for its oversight.
The SNCE is the general framework of action through which the exchange, clearing and settlement of transactions are carried out according to the operating and functional scheme described in the SNCE Regulation.
There are two types of participants in the SNCE:
- direct participants who are, in turn, Iberpay shareholders
- indirect participants who appear on the system represented by a direct participant.
Currently, only credit institutions are able to participate in the SNCE as direct participants.
However, the considerable growth of payment services and instruments led by payment and e-money institutions has made the payments sector one of the most innovative and attractive due to its technological innovation.
These circumstances, and the rising demand for opening payment systems to non-bank entities, have made it advisable to review the Regulation to ensure that the SNCE does not overlook this trend.
Therefore, payment and e-money institutions will have greater access to the SNCE, albeit without needing to fulfil the same criteria as direct participants.
This increased access will allow direct participants in the SNCE –credit institutions – to designate payment institutions and e-money institutions as Accessible Entities in the system – indirect participants – in order to facilitate the identification of those transactions related to payment services provided by such institutions, as well as to allow them technically to submit and receive transactions directly on behalf of the direct participant that has designated them as an Accessible Entity before the system.
By authorising this opening to new players in the payment services industry, the SNCE is line with the main tendencies and innovations that are taking place in the European context.
Cryptoassets – FinTech
Considerations of the National Securities Market Commission (“CNMV”) and the Bank of Spain regarding the risks involved by cryptocurrencies as an investment and the need for a regulatory framework
On 9 February 2021, the CNMV and the Bank of Spain published a joint release (the "Release") in which they emphasise the risk of cryptoassets as an investment due to their extreme volatility, complexity and lack of transparency. This Release is aligned with a previous release published by both authorities on 2018. The Release highlights the lack of regulation and the need to create a European regulatory framework to provide similar protection and guarantees as those offered by financial products.
The authorities recognise that the use of cryptoassets is a reality growing in leaps and bounds. However, it is important to consider some key aspects, including the risks they may trigger.
The MiCA Regulation, whose approval is still pending, is intended to set forth at European level a regulatory framework for the issuing of cryptoassets and its provision.
The Release points out that cryptoassets are not considered a means of payment and are not supported by a central bank or public authorities. These are complex instruments which may not be suitable for small investors, and whose price involves a high speculative component that may even entail total loss of the investment.
In addition, the price of these assets is formed in the absence of effective mechanisms to prevent their manipulation, and in many cases, prices are also formed without public information to support them.
On the other hand, the acceptance of cryptocurrencies as a means of payment is still very limited and the authorities note that there is no obligation to accept Bitcoin or any other cryptoassets as a means of payment of debts or other obligations.
One of the most relevant aspects about the use of cryptoassets is related to the players involved in the issue, marketing and custody of the assets, insofar as the providers of those services are usually established in third countries or, in some cases, in a location that is impossible to determine. This stunts the resolution of any dispute.
Finally, the Release warns about the risk of loss or theft of private keys, which threatens the loss of cryptocurrencies without the possibility of recovery, as custody is neither regulated nor supervised.
As an additional measure for the protection of investors, on 12 March the Spanish Government approved Royal Decree-Law 5/2021 on extraordinary measures to support business solvency in response to the COVID-19 pandemic. This strengthens the legal framework for the protection of investors with regard to the advertising of new financial instruments and assets in the digital area, focusing on cryptoassets.
The new regulation allows the CNMV to oversee the advertising of cryptoassets. The CNMV will develop, among other measures, the subjective and objective scopes and the specific control modalities to which advertising activities will be subject.
All in all, the high use of cryptocurrencies by investors is of concern to supervisory authorities because of all the potential risks. Hence, urgent adoption of the MiCA Regulation is necessary and will represent a step forward in the security and protection of investors, although there is a long way to go.