The Spanish Congress approved the anti-fraud law revised by the Senate last month. Spanish citizens must now inform their crypto assets even when they are abroad. The new law further provides for severe fines for citizens who fail to share this information with the authorities. It also stipulates the limit on which citizens can pay for services in cash.

Anti-fraud law strengthens supervision of cryptocurrencies

Spain finally approved its long-discussed anti-fraud law, which established a series of controls on cryptocurrency and cash. The recently passed law includes two important resolutions and amendments proposed by the Senate. First, Spanish citizens must now inform them of the cryptocurrency they hold at home and abroad. Second, the law provides for restrictions on cash expenditures to better control capital flows.

The law was introduced in 2018 and was not submitted until recently, imposing severe fines on citizens who fail to present their cryptocurrency assets in a timely manner. The controversial “720 model” will be used to determine the amount of fines, although Spain faced criticism in the EU for implementing this model in 2015. Based on this model, if citizens fail to submit a report, they may pay a fine of up to 150% within the specified time limit.

However, the EU is expected to propose a resolution on this issue on July 15, which may jeopardize the implementation of the new Spanish law.

Cash transactions are also regulated

These new restrictions on cash transactions may change the way citizens conduct business in Spain. Currently, the service limit provided by professionals is 1,000 Euros. For individuals outside of Spain, the law reduces the limit from 15,000 euros to 10,000 euros. However, the resolution has also been questioned by the European Central Bank. In 2018, Mario Draghi, then president of the European Central Bank, expressed concern about the potential negative effects of this measure and demanded that it be stopped. The European Central Bank stated:

This restriction makes it difficult to liquidate legitimate businesses that use cash as a means of payment, thereby jeopardizing the concept of legal tender.

The European directive sets the limit at 10,000 Euros, which is ten times the amount currently approved in Spain. All these measures are formulated to follow a clear goal: to strengthen the control of the country’s taxation and capital flows. But this may force citizens to use digital payments to settle more transactions. Therefore, in the long run, the law may also prompt them to adopt more alternative payment methods, such as cryptocurrency.

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