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How are the following key activities in the fintech space regulated and what specific legal issues are associated with each? (a) Crowdfunding, peer-to-peer lending; (b) Online lending and other forms of alternative finance; (c) Payment services (including marketplaces that route payments from customers to suppliers (eg, Uber and AirBnb); (d) Forex; (e) Trading; (f) Investment and asset management; (g) Risk management; (h) Roboadvice; and (i) Insurtech.

Answer ... (a) Crowdfunding, peer-to-peer lending

The Law on the Promotion of Business Financing (5/2015) regulates equity crowdfunding and crowdlending activities.

Both businesses are considered reserved activities and, as such, their performance requires that so-called ‘participatory financing platforms’ obtain authorisation from the Spanish Securities Exchange Commission (CNMV). Furthermore, if such platforms intermediate the flow of funds between funding seekers and investors, they must also either obtain authorisation as a payment services firm or engage an authorised payment services firm for such purposes.

(b) Online lending and other forms of alternative finance

There is no specific regulation on online lending in Spain. This notwithstanding, the Law on Consumer Credit Contracts (16/2011) and the general consumer protection and e-commerce regulations apply to such activities.

Furthermore, certain court rulings have established restrictive criteria regarding interest on revolving credit loans and microloans based on the Law on Repression of Usury 1908.

On the other hand, invoice trading is not subject to the Law on the Promotion of Business Financing, which regulates crowdlending.

(c) Payment services (including marketplaces that route payments from customers to suppliers (eg, Uber and AirBnb)

Payment services are regulated by Royal Decree 19/2018 on Payment Services and Other Financial Measures, which implemented the second Payment Services Directive in Spain.

This legal provision recognises two new categories of payment services firms in Spain: account information services providers and payment initiation services providers.

Regardless of the fact that the requirements regarding security measures entered into force on 14 September 2019, the Bank of Spain has confirmed that it will grant an additional transition period for entities to adapt to them.

(d) Forex

The foreign exchange (forex) industry is considered an investment service in Spain and, as such, is regulated by the Spanish Securities Market Law (whose consolidated text was approved by Royal Decree 4/2015) and the development legislation on investment services firms.

(e) Trading

Trading is an investment service which may be rendered only by banks and securities companies and securities agencies. Trading is also regulated by the Spanish Securities Market Law and the development legislation on investment services firms.

Social trading platforms may also be considered as a regulated investment service.

Binary options and financial contracts for difference have been subject to intervention measures pursuant to the CNMV Resolution of 27 June 2019.

(f) Investment and asset management

Investment advice may be rendered by any of the four classes of investment services firms, with financial advisory firms the simplest of these.

On the other hand, asset management entailing the creation of a client portfolio that is managed discretionally may be performed by any investment services firm other than financial advisory firms, with portfolio management companies the simplest of these.

These activities are regulated by the Spanish Securities Market Law and the development legislation on investment services firms.

(g) Risk management

Credit entities and investment services firms are obliged to have internal risk control departments; as a general principle, this task may be outsourced only to other regulated entities.

(h) Roboadvice

The development of automated advice and/or portfolio management activities entails the performance of a regulated investment service, provided that the advice activity refers to specific instruments and is made taking into consideration the personal circumstances of the investor.

(i) Insurtech

Insurance activities carried out by neo-insurers are subject to the Law on Ordination, Supervision and Solvency of Insurance and Reinsurance Companies (20/2015).

The digital distribution of insurance products as intermediary (either as an exclusive or tied agent or as an insurance broker), and insurance comparison platforms and marketplaces, are subject to the Law on Mediation of Private Insurance and Reinsurance (26/2006).

Other insurtech sub-sectors, such as peer-to-peer insurance and crowdsurance, are not yet regulated in Spain.

For more information about this answer please contact: Xavier Foz Giralt from Roca Junyent Abogados