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Fintech Market Overview

This article does not constitute legal advice.

Crowdfunding in Spain

Fintech Software

Law 5/2015 regulates crowdfunding and crowd-lending platforms and the provision of their services. These activities require an authorisation from the CNMV (with the intervention of the BoS). Unlike other financial regulations in Spain, which are transpositions of European financial directives, Law 5/2015 is purely domestic. However, it will have to be amended to be aligned with the EU Regulation on European Crowdfunding Service Providers (ECSP), which has applied since 10 November 2021. This Regulation was part of the European Commission's fintech action plan and the mid-term review of the 2015 capital markets union action plan. The Regulation lays down uniform rules across the EU for the provision of investment-based and lending-based crowdfunding services related to business financing. It allows platforms to apply for an EU passport based on a single set of rules, which makes it easier for them to offer their services across the EU with a single authorisation. The new rules are expected to increase the availability of this innovative form of finance, which will help companies seek alternatives to bank financing. Investors on crowdfunding platforms, meanwhile, will benefit from an aligned and enhanced investor protection framework, based on: (1) clear rules on information disclosures for project owners and crowdfunding platforms; (2) rules on governance and risk management for crowdfunding platforms; and (3) strong and harmonised supervisory powers for national authorities overseeing the functioning of crowdfunding platforms. The CNMV has established a simplified procedure for platforms that are already authorised in Spain so as to continue providing these services and to adapt to the content of the Regulation, which may be in force until 10 November 2022.1

In addition, the Spanish government approved Law 7/2020 of 13 November 2020 for the digital transformation of the financial system, which establishes a set of measures to accompany the digital transformation of the financial system and more importantly, it establishes a controlled testing area or sandbox. The aim of the sandbox is to carry out, with all the necessary guarantees, technology-based financial innovation projects (through new applications, processes, products or business models) provided that they are sufficiently mature, benefit users of financial services, facilitate regulatory compliance, increase the efficiency of institutions or markets, or contribute to improving the performance of public functions in the financial sphere.1

Collective investment vehicles are regulated under Law 35/2003 of 4 November 2003 on collective investment schemes and Law 22/2014 of 12 November 2014 on venture capital and other closed-ended investment schemes and management companies of the closed-ended investment schemes. There is no specific law for fintech collective investment vehicles.1

As opposed to the rest of fintech, and as mentioned in Section II, crowdfunding and crowd-lending platforms are subject to Law 5/2015 and the ECSP. Spanish consumer lending regulations apply when a fintech company is involved in a credit transaction with a consumer. Loans and financings may be assigned through an assignment contract and it is very common to assign entire portfolios of loans. These loans and financings may only be traded if they are converted into a security, which is assigned to a special purpose vehicle (SPV). The SPV may then issue securities backed by the credit rights arising from loans.1

Law 5/2015 amended the Spanish legal regime on securitisation, which is also regulated by Regulation (EU) 2017/2402 (the Securitisation Regulation) as recently amended by Regulation (EU) 2021/557 of 31 March 2021 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation to help the recovery from the covid-19 crisis. Under Spanish law, assigning assets to a securitisation fund should comply with the following requirements:

  1. the transferor and, as the case may be, the issuer of the securities assigned to a securitisation fund must have audited their annual accounts for the two financial years prior to the incorporation of the fund, except in certain cases;
  2. the transferor must disclose in its annual reports the current and future assignment of credit rights that impact each year;
  3. the assignment of the assets to the fund should be formalised in a contract; and
  4. the management company of the securitisation fund should submit a document to the CNMV for each asset assignment containing certain information on the assets. 1

Law 7/2020 offers an excellent opportunity for new entities to access the financial system via the recently approved sandbox. The fintech market will pay close attention to the outcome of the projects that are being tested over the coming months.1

Banking in Spain

Fintech in Spain

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Notes
  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/spain
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