Javier Pastor is not afraid of those black days in which a simple Twitter message written by tycoon Elon Musk can sink the price of bitcoin. Nor does it seem to bother him that the world’s most famous cryptocurrency – now around $ 33,800 – has lost nearly half its value since it broke the $ 60,000 barrier three months ago. Neither the instability warnings that organizations such as the National Securities Market Commission (CNMV) or the Bank of Spain periodically launch. To this degree in Business Administration and Marketing who came into contact with cryptocurrencies in 2017, what causes him a capital mistrust is the financial system that for centuries has been in charge of channeling the savings of citizens. “For me the truly risky thing is to have the money in a bank. It seems like a way to lose it ”, assures this lover of the new monetary creed from the terrace of a cafeteria in the center of Madrid.
Pastor, 36, who claims to invest 90% of his savings in bitcoins and the remaining 10% in other cryptocurrencies, is a very particular case. But less and less. These assets have not managed to become regular payment currencies or a massive instrument for the store of value. And plans by various central banks to launch their own digital currencies threaten their kingdom. But it is undeniable that, despite criticism from regulators, what years ago seemed like an eccentricity from a minority of techies has spread to become commonplace in many investment portfolios. And everything points to this trend not going away.
Hand in hand with the growing interest of investors of very different types – from young people who allocate a few hundred euros to experience the vertigo of the ups and downs of bitcoin to great fortunes in the hunt for strong returns – authorities are increasingly focusing their attention on this world. The consulting firm PwC admits an “exponential” increase in recent months in clients with inquiries about the tax implications of crypto assets.
The approval of the law on prevention and anti-fraud measures, which obliges trading platforms for these digital currencies to collaborate to prevent fraud, has triggered the number of inquiries. María Sanchiz, partner in charge of the PwC Family Business, assures by videoconference: “We advise clients with significant capital gains of more than 100,000 euros. They are people who invested a long time ago and have obtained very important profits or large assets that are beginning to invest in cryptocurrencies as an alternative good to diversify their portfolio ”.
Sanchiz explains to his clients that they must undertake an almost detective task to reconstruct the operations that have reported those profits and thus clear the suspicions that these funds come from illicit activities. “Many people believe that you only have to declare what you have obtained with cryptocurrencies when you exchange them into euros or another legal currency. But any change between these assets, for example from bitcoin to ethereum, already represents an increase in assets that must be declared ”, details this expert. If the earnings obtained come from the last four years, the tax treatment will be similar to that of currency exchange, for example, from dollars to yen. And there a rate of between 19% and 26% would apply.
If it can be proven that the capital gains are older, the Treasury could consider them prescribed. But there the investor may encounter a problem: that the treasury does not comply with the evidence provided and considers it an unjustified increase in equity, which would entail a tax with marginal rates higher than 45%. “We advise our clients to provide all possible evidence to show that the funds are not derived from illicit activities and to justify the capital gains. In the vast majority of cases, the profits will be invested in property such as real estate, which will necessarily have to be registered. And there the State will always have the necessary information to ask you where these funds come from ”, concludes the PwC partner.
Beyond the regularization of profits with the Treasury, Pablo Fernández Burgueño, a lawyer at PwC Tax and Legal, warns of where the next source of concern for these types of investors may go: what would happen if they die without making it clear where the keys to access your funds. “I know people with huge amounts of money in cryptocurrencies. And his biggest concern is how to make sure these crypto assets pass to his heirs. Some have engraved private keys on metal plates and deposited them at their parents’ homes. Others have declared half of their private key at the notary and have left the other half with a relative. We are talking about people with hundreds of thousands or millions of euros who want to make sure that their funds remain accessible ”, he concludes.
The Bank of Spain and the CNMV published a joint note in February warning of the high risk inherent in this type of investment due to its volatility, complexity and lack of transparency. Despite acknowledging that cryptocurrencies can energize and modernize the financial system, the two organizations warned of the lack of a European regulatory framework. And they recalled that they are not considered a means of payment, nor do they have the backing of a central bank and that they are not covered by customer protection mechanisms such as the Deposit Guarantee Fund or the Investor Guarantee Fund.
The anti-fraud law, published in the BOE on July 10, introduces the obligation to provide information on the balances of virtual currency holders, as well as on operations with these currencies. “Until now,” explain sources from the Tax Agency, “the actions on cryptocurrencies were based on specific requirements for entities, which implied a prior thread to pull. Now we will have a permanent and homogeneous supply of information ”. The CNMV is confident that this law reduces the risk of money laundering and highlights the importance of the regulation “unifying and coordinating” the European regime. “But it is not related to the regulation of investments in crypto assets, now under discussion in the EU,” qualify the sources consulted.
Javier Pastor insists that the arrival of this world will change relationships with money as we know them. Faced with those who criticize the opacity and high risk of cryptocurrencies, he highlights above all the transparency of a universe like that of bitcoin, which does not depend on any centralized body. And also remember that in recent years it has revalued 200% per year, an unbeatable percentage with any other type of investment. “But this is not what interested me the most. Money is a tool of power. And the technology behind cryptocurrencies guarantees that no one is going to control your investments, that you are not going to depend on a central bank that no one knows what interests it obeys, “he concludes, admitting with a smile that his speech may sound somewhat conspiracy .