30 April 2019, 13:04

2 min reading

In Depth: Spain Cryptocurrency & Blockchain Regulation

Spain is home of the iconic Sagrada Familia, flamenco, bullfighting, tapas and wine. It is also one of Europe’s most progressive destinations in blockchain implementation. Despite its messy political theatre, Spanish politicians all agree that this innovative technology could benefit everyone, bringing transparency and efficiency to its bureaucratic system. No wonder why the world’s first

In Depth: Spain Cryptocurrency & Blockchain Regulation

Spain is home of the iconic Sagrada Familia, flamenco, bullfighting, tapas and wine. It is also one of Europe’s most progressive destinations in blockchain implementation.

Despite its messy political theatre, Spanish politicians all agree that this innovative technology could benefit everyone, bringing transparency and efficiency to its bureaucratic system.

No wonder why the world’s first international blockchain congress will be held in M aacute;laga  mdash; one of Spain’s top tourist destinations  mdash; in November. This event will be focused on the multiple blockchain applications for private sector companies and the regulatory framework in place.

Local authorities estimate that over 400 companies are currently working on the deployment of blockchain strategies within their organizations. Last week, the Mayor of Malaga, Francisco de la Torre, confirmed that this initiative has the full support of the Spanish government and the European Commission.

Looking north, the autonomous community of Aragon is prove that blockchain isn’t just a southern trend, but that the distributed ledger technology is gaining traction in all corners of the nation. In February, the regional government allocated over 12 million euros for the development of «Industry 4.0,» which englobes blockchain, artificial intelligence, and other emerging technologies.

The funds were granted by the European Regional Development Fund (ERDF) as part of a comprehensive program designed to assist small and medium businesses in the digitalization of their processes and products, as well as tech companies in the development of R amp;D.

That’s not all. The Aragonese government has promised to launch a blockchain-based public procurement system as early as June 2019. This development is fuelled by the increasing level of corruption in the awarding of public contracts. By moving bidding to the blockchain, authorities intend to stamp out illegal activities within the public administration.

In this regard, the General Director of Contracting, Heritage and Organization of the regional government, Miguel Aacute;ngel Bernal, said:

«We can evaluate the offers without having to go through a trusted third party that encrypts them. If there is a change, we will verify it immediately. [ hellip;] With this new system, we’ll guarantee the integrity of the information handled in public procurement, offering greater transparency and improving the efficiency of projects.»

Private Sector Not Wasting Time Either

The government is not alone in trying to benchmark blockchain technology for its advantage. From simplifying trade finance to issuing loans and even tracking renewable energies, blockchain is showing its many faces and potential applications in the private sector.

In January, the Port Authority of the Bay of Algeciras and IBM signed a collaboration agreement to implement the company’s blockchain-based shipping platform Tradelens. With it, the port operator is now able to track shipments in real time, with higher precision, as well as enhance security in data sharing and collaboration through blockchain encryption.

The presence of IBM in this deal is no such thing as «random». The multinational computing giant has established itself as a leader in the Blockchain as a Service (BaaS) industry. A recent study has shown that IBM is holding the second place in terms of the highest number of blockchain patents worldwide as of 2019.

Earlier this year, Banco Santander, the largest bank in the country, announced a $700-million deal to leverage IBM’s expertise for the development of new technologies, such as blockchain. This agreement is expected to modernize the bank’s core banking system, offering new efficiencies to its operations and allowing the bank to deliver innovative services to customers.

The second Spanish bank by assets is not far behind in the blockchain adoption race. BBVA (Banco Bilbao Vizcaya Argentaria) issued a loan of 220 million euros on April 3 to Madrid’s regional government. In this particular case, blockchain was used to negotiate the entire deal. The banking institution has implemented blockchain technology for the release of d-loans (digital loans) for corporate and governmental clients. According to BBVA officials, «[blockchain] facilitates access for all the participants involved in the transaction and reduces the negotiation time thanks to the digitization of the entire process.»

The energy sector is also taking blockchain very seriously. Spanish energy giant Repsol completed a test in January in which blockchain technology was used to improve the safety certification process of its petrochemical products. To do so, Repsol Technology Lab Research Center (Tech Lab) partnered up with Finboot to create a solution that enables tracking samples and products throughout the entire production pipeline. It is estimated that Repsol could reduce its expenses by up to 400,000 euros per year.

But Repsol is just one of many examples in a long list of energy companies looking at decentralized technologies. Iberdrola, a public multinational electric utility company, has recently conducted a blockchain pilot to track renewable energy.

Iberdrola relied on Energy Web Foundation, an open-sourced and scalable blockchain solution to monitor the renewable energy supplied from several power sources to a partner’s office. In a note, the company acknowledged that using blockchain tech helped them save millions.

Together Stronger

The word «consensus» is not one to describe the Spanish political landscape. While there have been some rare examples over history when parties did share a common opinion on certain matters, in most cases it all ends up with a big public fight between the nation’s biggest parties: PP, PSOE, Unidas Podemos and Ciudadanos.

However, the four of them have come to an understanding on blockchain to work out a pact with the government to boost its adoption, as well as other Industrial Revolution 4.0 technologies.

In this sense, top officials from these parties highlighted the importance of setting a «regulatory sandbox» for businesses to test out new products or services. Hopefully, this «sandbox» is already in the works as the Spanish Council of Ministers has recently passed the draft bill on the «digital transformation of the financial system». A draft that aims create a legal environment to foster digital financial innovation while keeping consumers protected.

Parties also agreed that Aragon’s decision to use blockchain to increase transparency and fight corruption in public procurement is an example that should be replicated nationwide. As for taxation, the opinion was unanimous: there should be benefits for companies working on the development of new technologies.

Got Crypto, Got Taxes…

In 2018, the Spanish treasury launched an investigation to identify individuals using cryptocurrencies. The authorities targeted more than 60 different institutions, including 16 large banks and 40 crypto-related services (payments, exchanges, ATMs, etc.)

The request for information resulted in a list of 15,000 taxpayers that hold cryptocurrency. And last week, the tax agency issued tax warnings to every single one of them.

The note says:

«According to data available to the tax authorities, you have carried out transactions using cryptocurrencies. We would like to remind you that profits generated in such operations constitute income subject to IRPF (Spanish Income Tax for freelancers).»

Simply said: people holding cryptocurrencies are not exempt from fulfilling the fiscal obligations. In Spain, capital gains from the sale of digital currencies are subjected to a tax rate between 19 ndash;23% depending on the gains. Capital gains obtained by companies go with a flat rate of 25%.

  • Profits less than euro; 6,000 pay 19%
  • Profits between euro; 6,000 and euro; 50,000 pay 21%
  • Profits higher than euro; 50,000 pay 23%

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