No entities authorized to operate ICOs in Spain, regulator says

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Securities regulators in Spain have published a statement saying they have not yet authorized any entities to launch or promote initial coin offerings (ICOs) in the country, in a bid to quell rumors about the current status of regulation in Spain.

The National Securities Market Commission, or the CNMV, said that while it had not yet approved any ICO projects, it had yet to exercise any of its powers in vetting or regulating the sector.

As part of the statement, the regulator said ICO whitepapers should contain explicit disclosures of this fact, confirming to investors that projects have not been overseen by the regulator.

In setting out example language, the regulator said whitepapers should confirm ICO projects had not “been subject to any type of review by the CNMV or any other administrative authority.”

ICOs are highly risky for investors, with the overwhelming majority of token issues to date resulting in losses for early investors. A lack of investor awareness, coupled with patchy and often outdated regulation means the sector continues to disappoint investors lured by the promise of quick returns.

Disclosures of the kind suggested by the Spanish regulator are common for high risk investment products, and the steps from the regulator look to equalize the position as far as ICOs are concerned.

The Spanish regulator’s oversight at this stage has been limited to confirming the status of tokens as securities, which brings with it certain rules—including those that exclude token sales under a certain threshold as being exempt from the oversight of the regulator.

Token issues of less than €5 million ($5.6 million) which appeal to under 150 individual investors are exempt, notwithstanding any requirements for the participation of investment services companies.

“This, logically, is independent of the fact that the participation of an investment services company may be necessary, in accordance with the provisions of article 35.3 of the LMV [Spanish Securities Market Act] and in the terms set out in the criteria published by the CNMV in this regard,” according to the regulator.

Earlier this year, the regulator added a number of cryptocurrency exchanges to its warning list, alongside several forex exchanges thought to pose risks to potential investors.

The statement on ICOs has been welcomed as a further step towards clarifying the position of the regulator in respect of high-risk token issues.