- The Bank of Spain approved the registration of Coinbase in September 2023, having previously approved Binance and Bitsamp.
- Spain follows the MiCA Regulation for digital assets.
The Bank of Spain recently completed the registration of Coinbase, the largest crypto exchange in the US, as part of the process to allow Coinbase to operate within Spain. Is Spain’s apex bank finally making a stand with the industry? How does Coinbase getting registered with the Bank of Spain reflect on the status of crypto trading in the country?
Crypto Trading in Spain
Cryptocurrency adoption is on the rise globally as more people leverage the many advantages for their financial actions. Mainstream traditional institutions such as banks and financial services providers are also adopting cryptocurrencies to better serve customers and increase coverage. However, crypto-related activities are still subject to global regulations and control of central banks.
Like other Eurozone countries, Spain has no regulations against the use of cryptocurrencies. In fact, the Bank of Spain has no regulatory framework. It only adopts the EU’s Markets in Crypto-Assets Regulation (MiCA) regulation, which stipulates guidelines for crypto service providers, issuers, and related parties.
Although traders in Spain and other parts of the EU already trade on platforms such as MetaTrader 5, the Bank of Spain’s stand on trading may impact trading behavior and the adoption of cryptocurrencies in the country. The approval of exchanges in the country signals a readiness by the government to define crypto for users.
The Bank of Spain has neither banned nor promoted trading. Still, in 2021, it issued a guidance note on cryptocurrencies, stating that they are not classified as legal tender and so are not subject to the same regulations that apply to traditional financial instruments. As the top national bank, it has also discussed the potential implications of using cryptocurrencies.
Yet, the Bank of Spain is making clear moves to support cryptocurrencies and crypto-related activities by granting registration to exchanges looking to expand into the country. This positively impacts the crypto industry because traders often check for registration and licenses from government agencies and institutions.
In a 2022 speech titled “New digital technologies and the financial system,” the Bank of Spain Governor Pablo Hernández de Cos said, “Cryptocurrencies have the potential to improve financial inclusion and efficiency. They can also help to reduce costs and improve transparency in financial transactions.” Pablo Hernández de Cos is known for his approach to cryptocurrencies and policies during his tenure at the apex bank.
The Bank of Spain also recognizes the potential of cryptocurrencies to improve financial inclusion and efficiency. Cryptocurrencies have spurred central banks to propose digital versions of fiat currencies called central bank digital currencies (CBDCs). Several factors, including adopting a regulatory framework, may impact the adoption of crypto trading in Spain.
Crypto Regulation in the Eurozone
The MiCA regulation is set to take effect in 2024 and is binding on all companies offering crypto-related services or issues of digital assets. The EU’s European Securities and Markets Authority (ESMA) highlights consumer protection and anti-money laundering (AML) practices as an important focus of the MiCA regulation.
MiCA also includes provisions for tracing crypto-asset transfers and is designed to improve traceability and accountability in the industry. The EU’s move comes as the asset class grows rapidly in popularity, and the industry itself faces several challenges ranging from volatility to regulatory concerns.
Under the MiCA regulation, firms that provide crypto asset services are also required to obtain a license from national regulators and comply with national rules on risk management, market, and consumer protection.
The Crypto Industry Reacts
The industry has mixed reactions to the Bank of Spain’s adoption of MiCA and registration approval of several exchanges. The overall response has been positive, as crypto traders see it as an encouragement to explore trading safely. While some welcome the move and see it as a good move to legitimize the industry, others see the regulations as potentially burdensome.
It remains to be seen how trading will evolve in Spain and the Eurozone, and how regulations will impact the industry in the long term. However, the significant steps toward permitting trading remain welcome.
Conclusion
The Bank of Spain is Spain’s top financial regulator. The Bank has not clearly spoken against crypto trading or classified cryptocurrencies as legal tender; rather, it has taken steps to encourage firms that offer cryptocurrency-based products and services to serve traders in Spain.
The Bank of Spain is also making the industry safer for consumers. This attention to safety and user protection is crucial to the expected increase in crypto adoption following the approval of more crypto-based ETFs in the US.