CRYPTO BECOMING MAINSTREAM
- Spain is following the footsteps of El Salvador by legalizing cryptocurrencies in the country.
- The Partido Popular political party has sent the “Digital Transformation Law” to regulatory bodies in Spain and is awaiting necessary approval to be passed.
- This bill will enable homeowners in Spain to pay off their mortgage in cryptocurrencies such as Bitcoin, Ethereum and more.
What is the announcement?
Partido Popular, the opposition leading party in Spain, has sent a bill named the “Digital Transformation Law.” This bill enables Spanish homeowners to pay off their mortgage through cryptocurrencies. A home mortgage is a loan given by a bank or another financial institution to customers for purchasing a house. The debtors can repay these mortgages in instalments. Thus, the political party has suggested a digitalized way of paying back the mortgages.
In addition to the mortgage suggesting, the party also suggests the formation of National Crypto Asset Council to analyze and supervise the functioning of blockchains and cryptocurrency circulation in the country. The National Crypto Asset Council will comprise of representatives from the Directorate General of Treasury, the National Securities Market Commission and the Spanish Central Bank.
According to the text of the bill, this council will be responsible for analyzing the implications of using crypto assets and blockchain technology, facilitate the introduction of crypto circulation in the Spanish economy and finally lay down a set of regulations in order to avoid tax evasion and fraudulent practices. Cryptocurrencies are prone to illegal activities thus these regulations must be strict.
What does the bill imply?
The party has explicitly stated in the bill that people should not treat cryptocurrencies as ‘legal tender’. It will merely be a method of exchange between two parties provided that both parties are satisfied with the use of digital assets as means to settle their transactions. The crux of the bill will be for the settlement of house mortgage. However, parties can use cryptocurrencies for other transactions such as purchase and sale of goods and services. The tax slabs on these transactions will be the same and no special exemption will be given for the same.
The bill also contains a provision for companies looking to issue coin offerings to the public. Investments less than 6,000 euros are not required to be reported to the regulatory bodies. Any investments exceeding the aforementioned threshold must be declared to the financial authorities of Spain.
The bill is currently being presented to the existing Congress of Spain. It will be up to their discretion to pass the Digital Transformation law or to toss it.
What are external views on the bill?
Several cryptocurrency enthusiasts and Bitcoin maximalists were of the opinion that this bill is quite innovative. The bill helps as a means of exchange for settling misdemeanor transactions as well as huge mortgage debts. Cryptocurrencies literally help in reducing the debt burden of the people who have taken loans. They further recognized the need for a change in the current laws and regulations so as to materialize this bill. Laws would have to be made in order to change the status of cryptocurrencies from the current “means of exchange” to “means of payments”
What are the benefits of the bill?
Benefits to the general public:
- The general public will have a variety of options to pay their mortgage. They can use their discretion to pay off their debt in cryptocurrencies or the existing fiat currencies. Thus, it increases consumer’s autonomy.
- Users will also be able to get additional tax exemptions if they choose to use cryptocurrencies for settling their debts.
- The public can also use cryptocurrencies to settle private transactions such as purchase and sale of goods and services.
- The National Crypto Asset Council will be set up to protect the interests of retailers by avoiding fraudulent practices.
Benefits to Banks:
- The banks who have advanced loans to the people will be repaid back in assets rather than devaluing currencies.
- It is up to the banks to liquidate their assets as and when they receive it or hold them for capital gains.
- The banks stand a chance to make unprecedented returns if they choose to hold their digital assets for long-term.
Benefits to Corporations:
- The bill also contains a provision for companies looking to launch new coins through initial coin offerings.
- Startups and other blockchain firms can conveniently raise funds for their projects with this bill.