Spain's Crypto Tax Overhaul Could Trigger Market Chaos, Critics Warn

Spain's Sumar Parliamentary Group has proposed sweeping amendments to cryptocurrency tax laws, sparking debate over their potential impact on the crypto market and investor behavior. The proposals, introduced in November 2025, aim to reclassify crypto gains under higher tax brackets and introduce regulatory measures such as a risk "traffic light" system for crypto platforms. If enacted, the changes could significantly alter Spain's crypto landscape, with critics warning of legal challenges and market instability.

The first amendment would tax profits from cryptocurrencies under Spain's Personal Income Tax (IRPF) at rates up to 47%, a sharp increase from the current 30% applied to savings-based assets. The proposal also extends corporate tax to crypto gains at 30%, effectively creating a dual taxation system for individuals and businesses. Additionally, the group seeks to expand the definition of seizable assets to include all crypto holdings, surpassing existing rules tied to the EU's Markets in Crypto-Assets (MiCA) framework. These measures, outlined in the draft presented to the Congress of Deputies, reflect a broader effort to align crypto with traditional financial instruments under stricter regulatory scrutiny.

A third key amendment mandates the National Securities Market Commission (CNMV) to implement a visual risk "traffic light" system on crypto platforms. This would classify assets based on factors like regulatory registration, liquidity, and backing, providing investors with a color-coded assessment of risk. The initiative echoes a July 2025 demand by Spanish lawmakers for similar warnings, emphasizing transparency in a sector known for volatility.

Economist José Antonio Bravo Mateu and legal expert Chris Carrascosa have voiced concerns over the proposals. Bravo Mateu stated the amendments "clearly go against Bitcoin, Ethereum, and other cryptocurrencies," while Carrascosa called the plan "unenforceable," warning of "absolute chaos" in Spain's crypto tax regime if approved. Critics argue the reforms could deter crypto adoption, drive activity underground, and create compliance burdens for investors and exchanges.

Spain's current crypto tax framework, which treats gains as savings income taxed up to 30%, has been criticized as outdated. The proposed IRPF rate hike to 47% would align crypto with high-income earners, potentially reducing liquidity in the market. Meanwhile, the traffic light system aims to address investor protection gaps, though its implementation could face technical and regulatory hurdles.

The proposals come amid broader economic challenges in Spain, including Telefónica's announced job cuts and fluctuating small-cap stock performance. However, the crypto-specific amendments have drawn particular scrutiny for their potential to destabilize an emerging industry. If passed, the measures could prompt legal challenges from industry stakeholders and trigger a reevaluation of Spain's position as a crypto-friendly jurisdiction.