Legal Session #1: Crypto business, tokens and regulation
Last week, we organised a closed-door session for the Alice community to answer recurring doubts and questions about current crypto business models, tokens and their regulation. Moderated by Pablo Nebreda, Marketing Director of Alice, and with the participation, on behalf of ATH21, of Marina Foncuberta and Cristina Carrascosa, founder and director of the firm.
During the session, the definition of crypto assets or virtual currencies was reviewed. “Even though a few years ago, it was said that cryptocurrencies and blockchain were used for fraudulent activities such as arms and/or drug trafficking, or money laundering due to the anonymity that this technology allows, the 5th Directive on the Prevention of Money Laundering helped to alleviate this belief,” explains Marina Foncuberta, Senior Associate at ATH21.
What does the 5th Directive on the Prevention of Money Laundering establish? Crypto-assets are a medium of exchange that can be transferred, stored and traded by electronic means, accepted by natural or legal persons. It does not have the legal status of currency or money and is not guaranteed by a central bank or a public authority.
Foncuberta also shared a detailed explanation of the different types of crypto assets present in the market. Attendees learned about utility tokens (Asset Reference Tokens, e-money tokens and “pure” utility tokens), security tokens and non fungible tokens (NFT), and the importance of understanding the difference between each category and the regulations that apply to them.
Next, Cristina Carrascosa, Founder and Director of ATH21, focused her speech on crypto asset service providers, who are considered as such if they carry out any of the two activities detailed in Law 10/2010 on the prevention of money laundering:
- purchase and sale of virtual currencies
- e-wallet storage service
Companies cannot carry out any of these activities without being registered in the Register of Crypto-asset Service Providers with the Bank of Spain. This is undoubtedly an essential step to ensure trust and security in the cryptoasset market, and session participants also shared their own experience of the related processes and challenges.
In addition, attendees gained an introductory but substantial overview of crypto-assets and service providers. This overview laid the groundwork for future sessions to address specific regulatory issues in more detail, giving attendees a clear and comprehensive view of the implications and responsibilities of participating in this growing industry.
Cristina Carrascosa also shared a more in-depth perspective by presenting detailed information on the Markets In Crypto-Assets regulation (MICA) and its impact on crypto asset service providers. The MICA regulation establishes specific authorisation requirements, with the aim of providing safeguards for users and ensuring compliance with standards and implementation timelines.
Moreover, the Regulation 2023/114 was discussed, which imposes additional operations on crypto asset transfers. These regulations play an essential role in maintaining market integrity and protecting users.
Real examples were presented of companies that have already applied for registration as crypto asset service providers, including payment service providers, exchange platforms and launchpads. These cases illustrated the challenges and opportunities faced by entrepreneurs and companies wishing to enter this sector.
The proposed Digital Euro Regulation was also mentioned, as well as its potential implications for payment service providers.This proposal shows how crypto asset and traditional currency can intertwine, generating new business models and regulatory challenges.The Fintech Legal Session “Crypto business models, tokens and regulation” held by Alice Biometrics and ATH21 offered a comprehensive and enlightening overview of crypto assets and service providers, opening the door for future sessions that will address specific regulatory aspects in more detail.