Spaniards Forced to Declare Crypto Holdings on Tax Form

Slow But Steady Growth Rate in Crypto Adoption

This is not the first attempt to regulate the crypto market in Spain. The initiative stems from the government’s desire to collect additional tax revenue. The Agencia Tributaria has announced they have issued 328,000 warning notices for the 2023 fiscal year, reprimanding persons and companies that have not paid taxes on their crypto assets.

The number of warning notices is experiencing an upward trajectory, rising by 40% compared to 2022, when 150,000 warnings were issued, while 15,000 notifications were sent out in 2021 to irresponsible individuals and entities. The increase in notifications is not only an indicator of lost revenue, but a rising interest in crypto assets among the population.

Precise data is unavailable, but estimates say that 1.1 million Spanish citizens, or about 2.51% of the population, own cryptocurrency. Surveys conducted in 2022 reveal that about 6.8% of Spanish residents have made a crypto investment at some point over the past decade, mainly hoping to secure profits from the emerging technology.

Revenue projections for the Spanish cryptocurrency market for 2023 are $655.3 million, with an expected annual growth rate of 16.09% for the period between 2023 and 2027. The majority of the population is still not interested in crypto. That’s supported by recent polling data, which showed that about 65% of Spaniards have declared no desire to adopt the proposed digital euro.

Proactive Measures for Crypto Regulation

Spain is working on being proactive concerning crypto by implementing different regulations. One such policy is the Markets in Crypto-Assets Regulation, a comprehensive European Union crypto framework, which the Spanish Ministry of Economy plans to implement by December 2025.

The changing attitude in Spain fosters a more crypto friendly environment, which has motivated several big industry brands such as Kraken, Coinbase, and Crypto.com, to acquire licenses from Spanish authorities.

The regulatory framework will bring stability to the evolving market. Currently, cryptocurrencies are not classified as legal tender in Spain, as is the case with the Euro or other fiat currencies. The government views crypto assets as property and, as such, are subject to taxation. The Law on Measures to Prevent and Combat Tax Fraud from 2021 requires centralized crypto exchanges to share customer information with the government.