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Image source: http://www.flickr.com/photos/100239928@N08/

Image source: http://www.flickr.com/photos/100239928@N08/

Until this week, the Spanish government has kept its distance from bitcoin. With the rapid growth of interest in virtual currencies in Europe, and the recent explosion of bitcoin automated vending machines in Spain itself, it’s only natural that the country’s tax authority, the Agencia Estatal de Administración Tributaria (AEAT), has turned its gaze to bitcoin. While the AEAT’s current concern is money laundering and tax-dodging schemes, there are hints that Spain is starting to take the financial implications of cryptocurrency more seriously.

In a report on the AEAT decision published by CoinDesk, the Spanish tax agency was said to be “monitoring developments” and investigating the possibility that bitcoin would “jeopardize tax controls or be used in money laundering schemes or for other illicit purposes.”

The most telling indication of this is the recent AEAT announcement that bitcoin and other virtual currencies are to be treated as cash for tax purposes. This ruling is the exact opposite of the view taken by the U.S., which treats bitcoin as a kind of property, like stocks or precious metals. The decision appears to be related to a 2010 Spanish regulation limiting the amount of some cash transactions to €2,500, or the equivalent value in foreign currency.

Given that all cash transactions already subject to this limit, the ruling simply places bitcoin in the well-understood realm of foreign currency transactions. Being a historical merchant crossroads and a major international tourist destination, Spain is extremely well prepared to handle the introduction of a new currency in its financial system, but poorly set up to accommodate a currency-like commodity. Representatives of the Spanish bitcoin community largely welcomed the news, as it appears to indicate a growing awareness of bitcoin by the country’s authorities without signaling hostility to bitcoin itself.

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