Cryptocurrency and real estate in Spain

We hear a lot about cryptocurrency and we are of course very familiar with real estate, but what – if any – is the relationship between these sectors of the new economy?

For those who aren’t so familiar with cryptocurrency or have been confused by its rather conceptual nature, here is a quick summary. Cryptocurrency is, in reality, a form of exchange of value rooted in the same idea as normal money, namely that its bearer (owner) can exchange this ‘vehicle of value’ for goods and services. So, like other transactable valuables such as precious metals, precious stones, stocks, bonds, physical money, cheques, credit/debit cards, IOUs and also today’s digital wallets, it represents a store of money through which we can make and receive payments.

The above list is broken down into types of accounts that hold your money, and assets that can gain or lose value, but cryptocurrency is both. In reality, it is an electronic open ledger of transactions that are recorded using advanced blockchain technology, but since its launch some ten years ago, Bitcoin and the subsequent types of cryptocurrencies have also been traded like the stocks, commodities and other assets upon which the normal financial system is built. The difference is that it is: as of yet uncontrolled, highly speculative (steep drops and rises in value), as of yet untaxed and also until recently had no physical ‘coin’ representation.

Buying a home with cryptocurrency in Spain

All of this makes cryptocurrencies more conceptual than normal forms of money, which we have grown up with and are so familiar with, but which are in essence not so different. The biggest differentiator is that, while conventional currency is official and issued by public institutions endorsed by national governments, Bitcoin and its peers are strictly unofficial, not controlled or taxed, and therefore not guaranteed by governments or central banks. This means there is no assured value, and as cryptocurrency lives outside of the official system, it is very hard to convert into ‘real’ money.

The authorities around the world are studying the situation and are likely to be pragmatic as they begin to assert their control in the form of financial regulation and taxation. But while there are already crypto-to-cash ATMs and people offering (luxury) products and services in exchange for Bitcoin and the like, it remains highly complicated to buy large ticket items such as properties with cryptocurrency.

For one thing, while your crypto assets remain for now untaxed, they are subject to the usual wealth taxes once converted into normal currency, so any house purchase will be subject to taxation and quite possibly money-laundering investigation, for cryptocurrencies have been used for this purpose.

For now, therefore, the combination of cryptocurrency and real estate remain unlikely bedfellows.

By Adam Neale | Property News | November 22nd, 2019

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