The Spanish market regulator has announced that companies that operate funds are allowed to make crypto investments – but only under certain conditions.
Per El Economista, the National Securities Market Commission (known locally as CNMV), has released new guidelines for institutional investors. The guidelines show that the CNMV is now happy to allow mutual fund operators, collective investment schemes (known as IICs in Spain) and collective investment variable capital companies (known as sicavs in continental Europe) to invest in crypto-assets. However, the regulator has made a number of reservations.
First, funds are only allowed to offer crypto products in cases in which “market prices are determined from buying and selling transactions by third parties”.
In addition, fund managers must warn their clients that crypto assets represent a “high risk investment” that “contains a highly speculative element”. Such warnings should also be included in the prospectuses of the Funds and specifically mentioned in all marketing materials.
Finally, institutional investors and fund operators are prevented from investing in certain types of crypto-derivative instruments and securities that are based on crypto-assets, including crypto-powered Exchange Traded Commodities (ETCs) or Exchange Traded Notes (ETNs) is used to underpin one to track lying index of tokens.
So far, no Spanish funds have attempted to launch crypto-related financial products, but the CNMV’s new guidelines could prove to be a catalyst that will change that. Many managers believe they want to follow the example of American companies like BlackRock.
The regulator’s move is a bit unexpected, especially since it has spoken loudly about the volatility of crypto several times this year. Back in February, the CNMV and the Spanish central bank issued a joint statement warning citizens about the “risks” associated with investing in crypto assets and pointing out that the sector warned largely unregulated and against one “Great volatility” in prices warned.
An economics professor at the Universidad San Pablo CEU in Madrid was quoted as saying that Spanish investors might prefer to invest in portfolios that contain a Bitcoin element (BTC) in addition to traditional assets and stocks, rather than making direct crypto purchases.