In a statement dated March 26th 2019, Spain’s Comision Nacional Del Mercado de Valores (National Securities Market Commission or CNMV) clarified that not a single Initial Coin Offering (ICO) has been approved within its jurisdiction.
Spain’s Regulatory Stance on ICOs Explained
The CNMV writes in its release that recent media publications in Spain obliged the organization to publicly clarify its stance on ICOs. A translated version of the release reads how the media included the following:
“…information published [recently] in some media…about possible fundraising operations…through ICOs (initial coin offerings), in which investors would receive tokens…(or) vouchers representative of certain rights registered with a blockchain.”
In clarifying the regulation situation in Spain, the commission continued,
“The CNMV has not approved any information prospectus to date or has exercised any power of authorization or verification of any operation of that nature.”
The regulator goes on to say that it has done certain work to ensure that ventures of this type were monitored to ensure compliance.
More specifically, the CNMV verified article 35.2 of the Spanish Securities Market Law was fulfilled, which features the following requirements:
“…total issuance of less than 5 million euros…issued to less than 150 retail investors…(and) a minimum per investor of at least 100,000 euros.”
The commission also ordered all prospective ICOs launched in Spain to display either the following caveat or a similar phrase:
“(This) is not an information brochure nor has it been the object of any kind of review by the CNMV or any other administrative authority.”
Blockchain’s Transition to Security Tokens Explained
ICOs were previously used as a feasible way to curtail securities regulations and raise capital directly from investors, typically with a mere idea and prior to any functioning product.
In 2018, an estimated $1 billion was poured into ICOs. Very little came from that, with a significantly high percentage of those funds lost given current market capitalizations.
A growing number of securities regulators throughout the globe have subsequently entered the digital asset space.
U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton, for example, has repeatedly described how virtually every ICO he has seen, constitutes a securities offering. Such ICOs must consequently abide by the commission’s existing securities laws, he says.
Due to the regulatory ambiguity surrounding ICOs, those wishing to raise capital via Distributed Ledger Technology (DLT) have turned to the Security Token Offering (STO) instead.
Sportsledger, for example, cancelled a publicly announced ICO, and turned to the STO as a viable alternative.
Financial securities in numerous asset classes have already seen tokenization, including equity, real estate, REITs, investment funds, and fine art.
What do you think of the regulatory situation in Spain? Will Spanish securities regulations continue to reflect those in the United States? Let us know what you think in the comments section below.
Image courtesy of the CNMV.