14. Virtual currencies

Regulations: Art. 24 Wealth Tax Act

The "virtual currency" (also called "cryptocurrency") is defined in article 1,5 of Act 10/2010 , of 28 April, on the prevention of money laundering and terrorist financing, such as "the digital representation of unissued value not guaranteed by a central bank or public authority, not necessarily associated with a legally established currency and that does not have a legal status of currency or money , but which is accepted as a means of change and can be negotiated, stored or transferred electronically . "

Taking this definition into account, virtual currencies are considered, for tax purposes, as immaterial assets, eligible for units or fractions of units, that they are not legal tender currency, but are used as a means of payment as they can be exchanged for other goods, including other currencies virtual, rights or services if accepted by the person or entity that transmits the good or right or provides the service. Since virtual currencies such as the rest of the assets held by the taxpayer for Wealth Tax must be declared.

Under the term "virtual currencies" various categories such as bitcoins (the most well-known and popular) and other alternative currencies other than these (which are generally referred to as "altcoins"), all of them under the common denominator of being created with a "cryptographic" basis (system that protects information and communications using algorithms that makes them secure and immutable tables) and operate independently on their own DLT networks (distributed registration technology or blockchain), allowing a public register of all transactions carried out with the corresponding virtual currency, up to the most recent ones such as statecins (which are virtual currencies) designed to reduce the volatility of bitcoin or other cryptocurrencies, as they are linked to the value of one or more legal currencies - such as the dollar or euro -, material goods such as gold or real estate, or other cryptocurrency or controlled by algorithms that allow a stable price to be maintained) and, in general, the so-called "tokens" of payment that, unlike the previous ones ( bitcoins or altcoins), do not have their own DLT or blockchain, so they require another DLT (non-proprietary) platform to operate. For example, Ethereum is one of the platforms that allows people or entities to create their own virtual currencies to finance projects.

Project financing through these platforms is currently taking place mainly through the so-called "initial offers of cryptography currencies "or ICOs (Initial Coin Offering, an acronym that evokes the term IPO or Initial Public Offering, used in relation to flotation processes),

However, the ICO expression may refer to both the actual issuance of cryptocurrencies and the issuance of rights of a variety of nature generally called "tokens."

The term token ("sheet" could be translated into Spanish) is broader than that of cryptocurrencies, since it can be used not only as a means of payment but for other uses, as it turns any right into a taxable and tradable digital asset. A token can represent a currency, but also a property, an action, a financial asset, etc. Hence, we are currently talking about cryptoassets.

The uses and characteristics of these "tokens" (tokens or cryptoassets) vary, with the most common classification of these "tokens" being that which allows the differentiation between two types or categories:

In the case of virtual currencies, the taxpayer must declare the balance of each currency in the Wealth Tax virtual different from that which is the holder at the accrual date, i.e. at 31 December of each year, and valued at price on the market on that date, i.e. for its equivalent value in euros at that date.