"Spain is emerging as a hub for cryptocurrency innovation, with increasing adoption across industries like real estate, retail, and tourism."
Economic Situation in Spain
The Spanish economy grew significantly in 2023, with a positive outlook for the future despite global uncertainty. However, there are long-term challenges that make it hard for Spain to match the living standards of other euro area countries.
The Spanish economy performed well in 2023. GDP grew by 2.5%, much higher than the euro area average of 0.4%. Economic activity was also 3% above pre-pandemic levels. This growth was driven by higher public consumption, increased household purchasing power, and strong services exports.
Growth is expected to continue, with forecasts of 1.9% in 2024 and 2.1% in 2025, exceeding euro area projections. Spanish house prices rose by 4.2% in 2023, which is higher than other European markets.
However, challenges remain. These include structural issues that limit Spain’s ability to reach the income levels of other European countries. The Banco de España’s latest report depicts these problems in detail and offers policy recommendations to address them.
However low productivity and the low employment rate in Spain are the main reasons for the lack of convergence with Europe
Cryptocurrency adoption could potentially offer Spain several benefits. Which includes financial inclusion, cheaper transactions, as well as financial education
"Spanish banks are beginning to offer crypto custody services, signaling institutional trust in digital assets."
Current State of Cryptocurrency Adoption in Spain
Source: Purse.io
Spain has emerged as one of the leading countries in Europe when it comes to cryptocurrency adoption. From individuals embracing digital assets as an alternative investment to businesses integrating blockchain technology.
In fact Torrevieja, a city in Spain's Alicante province, aims to become the first crypto-friendly city in Europe.
The plan is to encourage local shops and businesses to accept cryptocurrency as a payment option. The city plans to use blockchain technology to make business activities digital. In the first phase of the project, the goal is to encourage the use of cryptocurrencies for transactions.
Merchants in Spain can also access educational courses at the University of Alicante to learn how to use crypto payments in their businesses. Torrevieja's plans show how crypto is becoming more accepted across Spain. The number of registered crypto companies in Spain has grown a lot in recent years, showing how popular crypto is becoming.
In 2022, the country surpassed El Salvador, in the number of Bitcoin ATMs. It reached a total of 215 ATMs, making it the third-largest crypto ATM hub. In 2023, the country saw a 56% increase in registered crypto companies.
Most of these companies, 61 out of 85, are local brands, but many international companies are also involved. This mix of local and global providers has created a strong and competitive system to support crypto users.
In early 2023, the low-cost airline Vueling, based in Barcelona, shared some exciting news. The company announced that customers would be able to pay for their tickets using cryptocurrencies.
Spain is becoming a hub for crypto innovation. However cryptocurrencies are not recognized as legal tender, and investments in them are not covered by deposit insurance or investor compensation schemes. Businesses can accept cryptocurrencies as a form of payment. However, they must account for these transactions according to tax regulations.
"More than 15% of Spanish millennials actively invest in cryptocurrencies, driving the trend forward."
Cryptocurrency Law in Spain
Source:Freepik
Cryptocurrency is legal in Spain, but it is not considered "legal tender." This means you can buy, sell, and use cryptocurrencies, but they don’t have the same status as the euro. Instead, cryptocurrencies are treated as digital assets, like property, which can be exchanged for goods, services, or money.
While the government in Spain supports innovation in blockchain and crypto, it has strict rules to prevent illegal activities, such as money laundering and tax evasion.
It is estimated that over 1.1 million people, 2.51% of Spain’s total population, currently own cryptocurrency.
Taxation of Cryptocurrency in Spain
In Spain, people must pay taxes on the profits they make from using digital assets.
- Profit less than 6,000 EUR – the tax is 19%;
- For income between 6,000 and 50,000 EUR – the tax is 21%;
- If the income is more than 50,000 EUR – the tax is 23%.
Income earned from dividends or other involvement in corporate assets by non-residents in Spain is taxed at a flat rate of 19%.
Besides buying, selling, and earning dividends, cryptocurrency mining in Spain is also taxable. Anyone involved in mining, whether individuals or businesses, must register with the Spanish tax authorities.
In 2021, a law to stop tax fraud was introduced in Spain. This law requires people to inform the tax authorities about their bitcoin, altcoin, and other cryptocurrency balances and transactions. If they fail to do so, they could face a fine of 10,000 EUR.
"Spain ranks first in Europe for Bitcoin ATMs, with over 269 locations across the country."
Government Regulations and Policies
Source: Nextrope
Currently, Spain does not have any specific rules or regulations that explicitly restrict Spanish banks from holding or dealing in crypto assets or their derivatives. It's also important to know that cryptocurrencies are not considered legal tender in Spain. Only the euro is recognized as the country’s legal tender, as stated in Law 46/1998 from December 17.
On February 17, 2022, new rules for cryptocurrency advertising in Spain came into effect. These rules set specific standards for how crypto ads should be handled. For large advertising campaigns, companies must notify the CNMV (Spain's financial regulator) at least 10 working days before starting.
This notice must include key details like the campaign’s dates, location, and description. If companies fail to do this, the CNMV can issue penalties as allowed by law. Breaking these rules may lead to fines, with the amount depending on factors like how much money the campaign made and the seriousness of the violation.
On February 8, 2018, Spain’s stock market regulator, the CNMV, announced new rules to manage the growing amount of cryptocurrency advertising. These rules helped make the regulations around crypto more clear. The guidelines describe crypto assets as “a digital version of assets or rights that can be shared or stored electronically using decentralized technology or similar systems.”
The new law is expected to take effect three months after it appears in the official Spanish National Gazette (B.O.E.).
"Spain is among the top 10 countries globally for crypto adoption, showing rapid growth year-on-year."
Challenges to Cryptocurrency Adoption in Spain
While cryptocurrency is growing and gaining popularity worldwide, Spain faces its own set of hurdles when it comes to widespread adoption. Understanding these challenges helps shed light on what needs to change for crypto to become more common in the country.
Regulatory Hurdles
Spain has yet to finalize clear rules about how cryptocurrencies should be regulated. Without clear guidelines, businesses and individuals feel unsure about using or investing in crypto. This uncertainty can slow down the growth of crypto services, as companies worry about breaking unclear laws.
Lack of Trust
Trust plays a big role in adopting new technologies. In Spain, some people associate cryptocurrencies with scams or illegal activities due to media coverage of fraud cases. Overcoming this perception is crucial to building confidence in crypto as a legitimate financial tool.
High Energy Costs
Spain’s relatively high electricity prices discourage activities like crypto mining, which require significant energy. For crypto enthusiasts interested in mining, these costs can make it unprofitable, limiting Spain’s role in the global crypto ecosystem.
Banking Resistance
Some traditional banks in Spain are cautious about cryptocurrencies. They may restrict transactions related to crypto exchanges or impose high fees, making it harder for individuals to invest in or use digital currencies. This resistance from the banking sector creates an extra barrier for adoption.
Tax and Compliance Issues
Spain has strict tax rules for cryptocurrencies, which can be complicated and discouraging for users. Reporting crypto earnings can feel overwhelming, especially for people new to the technology. This adds an extra layer of difficulty for those who are excited about cryptocurrency.
"In 2023, 40% of Spanish businesses considered integrating blockchain technology."
Potential Benefits of Crypto Adoption in Spain
Cryptocurrency adoption in Spain can bring many advantages to individuals, businesses, and the economy as a whole, and these are some of the benefits
Improved Financial Inclusion
Cryptocurrencies can help people who don’t have access to traditional banks. In Spain, there are still individuals and small businesses in rural or remote areas that face challenges accessing financial services.
With crypto, all you need is a smartphone and internet access. This makes sending, receiving, and saving money easier for everyone, especially those who are unbanked or underbanked.
Faster and Cheaper Transactions
Traditional banking systems often have high fees and slow processing times for transfers, especially for international payments. Cryptocurrencies like Bitcoin and Ethereum can make transactions faster and more affordable. For Spain, which has a significant number of workers sending money abroad and receiving funds from overseas, this is a game-changer.
Boosting Tourism and International Trade
Spain is a top tourist destination, and crypto payments could enhance the travel experience. Tourists using crypto don’t have to worry about exchange rates or carrying cash. Local businesses that accept cryptocurrencies can attract more international visitors and provide smoother transactions.
Encouraging Innovation and Startups
Cryptocurrency adoption often goes hand in hand with blockchain technology. Blockchain offers many solutions beyond just digital money. By adopting crypto, Spain could become a hub for tech startups and innovation. This could lead to job creation and investment in new industries.
Strengthening Economic Growth
Using cryptocurrencies can bring more transparency to financial systems, which helps reduce fraud and corruption. It also allows for efficient tracking of transactions, making the economy more robust. This transparency can boost investor confidence in Spain’s economy.
Empowering Small Businesses
Small businesses often struggle with high transaction fees and slow payments from banks. Cryptocurrencies can solve this problem by offering lower fees and quicker payments. This allows businesses to save money and improve cash flow, which is crucial for growth.
Cryptocurrency Usage in Various Sectors in Spain
Source:Shutter stock
Spain has become one of Europe’s most active countries when it comes to cryptocurrency. From businesses to everyday people, digital currencies are making a difference in various sectors. Spain’s adoption of cryptocurrency in different sectors highlights the country’s forward-thinking approach. As more industries discover its benefits, cryptocurrency could become an even bigger part of everyday life in Spain.
Retail and E-Commerce
Cryptocurrency is gaining popularity in Spain’s retail sector. Many online stores and physical shops now accept Bitcoin and other digital currencies as payment. This makes it easier for customers who prefer using crypto to buy goods and services. Some businesses even offer discounts to encourage crypto payments, which are faster and often have lower fees than traditional payment methods.
Real Estate
Spain’s real estate market has embraced cryptocurrency, especially in popular cities like Barcelona and Madrid. Some property sellers allow buyers to pay in Bitcoin or Ethereum, attracting international investors who prefer using crypto. This trend has made real estate transactions quicker and more secure, thanks to blockchain technology.
Tourism and Hospitality
Spain is a top tourist destination, and its tourism industry has been quick to adopt cryptocurrency. Some hotels, travel agencies, and even restaurants accept crypto as payment. Tourists find this option convenient because they can avoid exchange rates and international transfer fees. Blockchain is also being used to improve booking systems and customer experiences.
Finance and Banking
While traditional banks in Spain were once skeptical of cryptocurrency, many are now exploring its potential. Some financial institutions are testing blockchain technology to make transactions faster and safer. Others are creating services to help customers invest in cryptocurrency or manage digital wallets.
Technology and Startups
Spain’s tech sector, especially in cities like Valencia and Madrid, is a hub for cryptocurrency innovation. Startups are using blockchain to create new apps and services, from secure payment platforms to tools for tracking supply chains. These innovations are helping businesses operate more efficiently and transparently.
Education and Awareness
Many universities and organizations in Spain are offering courses and workshops about cryptocurrency and blockchain. This helps people learn how to use digital currencies responsibly and understand their potential. Increased awareness is encouraging more individuals and businesses to adopt cryptocurrency.
Art and Entertainment
The creative industries in Spain are also exploring cryptocurrency. Artists and musicians use blockchain to sell their work directly to fans, avoiding middlemen. NFTs (non-fungible tokens) have become popular in Spain’s art scene, allowing creators to protect their digital works and earn fair compensation.
Conclusion
Adopting cryptocurrency in Spain has the potential to unlock many benefits, from financial inclusion and faster transactions to innovation and economic growth.
While there are challenges to address, such as regulation and education, the long-term advantages could outweigh the risks. By embracing crypto, Spain can pave the way for a more modern, inclusive, and forward-thinking economy.
