On February, 2014 the Council of Ministers approved the draft bill regarding dual nationality for Sephardic people. Thus, applicants will be able to maintain their previous nationality and acquire Spanish nationality, even if they do not live in Spain. They will just have to prove their membership to the Sephardic community. The alternative requirements established by the Draft Bill as sufficient proof of the condition of Sephardic Jew are detailed next:
• A certificate from the competent rabbinic authorities legally recognized in their place of residence
• Family surnames or family language (Ladino) • A certificate from the Spanish Federation of Jewish Communities confirming that the applicant is a Sephardic Jew • The inclusion of the name of the applicant or his/her direct descendants in the lists of Jewish families protected by Spain • Link or relationship of the applicant to a person or family as mentioned above
As stated above, this is a draft bill approved by the government, and it has to be submitted to the Spanish Parliament to modify article 23 of the Code of Civil Law. During this process, modifications can be introduced. So it may take several months until the law comes into force.
Here you can check the Draft Organic Law in Spanish.