Cryptocurrencies

Cryptocurrencies are a digital exchange asset; they are virtual currencies underpinned by Blockchain technology.

The Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 defines them as:

“a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency, does not possess the legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.”

Unlike the traditional model, these currencies do not require backing from a central banking system or a government. Instead, they are governed by decentralised systems with strong encryption, allowing payments and other operations to be carried out securely.

The first cryptocurrency to operate was Bitcoin, defined as a “peer-to-peer” (P2P) payment system. From there, and given its worldwide impact, other alternatives and types of cryptocurrencies have been created, such as Ripple, Litecoin and Ethereum.

Today, numerous companies are trying to create their own cryptocurrency platforms and their own tokens, making it essential to consider the legal implications involved in their creation and management.

Advantages

This new type of virtual currency, with the characteristics of Blockchain technology, has attracted the attention of businesses and individuals due to the advantages it offers.

The main advantages of cryptocurrencies include:

• They are not tied to the policies or economies of any specific country, enabling use anywhere in the world without limits.
• The cryptographic techniques used minimise the risk of counterfeiting or duplication. In addition, an incorruptible record of transactions is generated.
• Transaction speed is higher than traditional bank transfers.
• Decentralisation. Owing to their decentralised nature, third-party intermediaries are not required to carry out transactions.
• Low transaction costs, as no intermediaries are needed.

Legal Advice on Cryptocurrencies

Like any other emerging technology, cryptocurrencies do not yet have specific regulations of their own; however, this does not mean that existing legislation does not apply to them.

To carry out operations with cryptocurrencies, we must take into account numerous legal issues that affect them, including new tax obligations being approved at national and European level, such as Spain’s Law 11/2021 of 9 July on measures to prevent and combat tax fraud, which introduces new obligations relating to the provision of information on the holding and operation of cryptocurrencies.

Taxation of Cryptocurrencies

A team specialising in cryptocurrencies, NFTs, STOs, DAOs, DeFi, staking, etc., is inconceivable without an expert tax team. Our tax law department is highly specialised in all matters related to the Web3 / blockchain world.

In this regard, we would highlight our ability to provide advice to creators and exchanges alike on tax settlements, filing of Form 720, tax queries, and any other need that may arise for our clients.

Legal Advice for Companies

• Obligations before the Spanish Tax Agency (Agencia Tributaria)
• Preparation of a Compliance Plan
• Advice on the taxation of cryptocurrencies
• Advice on ICO financing
• Legal implications of buying/selling and mining cryptocurrencies
• Advice on trading services, wallets, exchanges and custody
• Judicial defence in civil and criminal proceedings

Legal Advice for Individuals

• Advice on the taxation of cryptocurrencies
• Obligations before the Spanish Tax Agency (Agencia Tributaria)
• Legal implications of buying and selling cryptocurrencies
• Advice on how wallets and exchanges work
• Contracts related to cryptocurrencies
• Wills or inheritance involving cryptocurrencies
• Sanctions imposed by the Tax Agency
• Theft and scams
• Anti-money laundering
• Judicial defence in civil and criminal proceedings

Tax Inspections

At Navas & Cusí we specialise in defending our clients in tax inspections related to cryptocurrencies and NFTs. Our work covers the inspection itself, as well as the review and collection of data, and we act at all stages (inspection, TEAC, administrative litigation, cassation and constitutional appeal).

Our knowledge as lawyers specialising in cryptocurrencies, together with our tools, enables us to defend clients across almost any blockchain or protocol. This allows us to review settlement proposals with clarity.

Scams and Asset Recovery

A percentage of investors suffer cryptocurrency scams. The advantage of Blockchain compared with a traditional banking fraud is that Blockchain allows us to trace the scam and potentially block the funds. For this reason, at Navas & Cusí we have a team specialised in cryptocurrency fraud and asset recovery.