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Spanish politicians go full steam ahead with blockchain development

04.08.2021

Despite its high status as a fully fledged member of the European Union and an enviable lifestyle, Spain is a nation which has patiently tolerated an increasingly weak economic situation.

Ever since before the global financial crisis of 2008, Spain’s struggle with youth unemployment, crippling national debt and an inability to modernize or reform the traditional financial system, which was already on its uppers when it was dealt an even bigger blow during 2020 at the hands of fierce lockdowns.

Spain’s GDP grew by just 2% in 2019, however in 2020, it fell by -20% which is a hard knock to take.

There may be light at the end of a very long tunnel, and if the opposing political party gains any power, that particular light will be cryptocurrency.

The Popular Party, which is the leading opposition to the incumbent government in Spain, has drafted a new ‘digital transformation law’ which is a proposal, drawn up by policymakers from within the Popular Party, that would allow mortgage repayments to be made in cryptocurrency on a fully legitimate basis across Spain, regardless of which bank granted the mortgage.

The Popular Party, which is a conservative political party and a member of the centre-right European People’s Party (EPP) which is also represented in the in the European Parliament, has unveiled plans to legalize many blockchain-related decentralized finance (DeFi) initiatives and put in place full regulation for cryptocurrency, something that Coinmetro is an absolute advocate of.

Coinmetro views full regulatory framework and licensing for cryptocurrency exchanges as being instrumental to the sustainability of cryptocurrency and decentralized finance and equally instrumental to the longevity of cryptocurrency and blockchain related technology as linchpins of the financial services world of the future.

In terms of the current proposals by the Popular Party, such an implementation would explore the possibility of house owners paying their mortgages with cryptocurrencies, enticing the use of these assets as means of exchange, and additionally, increasing the functionality toward investment firms to create their own cryptocurrency for buying mortgages from banks too.

Another important facet of the proposal is that it includes plans for the modernization of the traditional financial system in Spain, which is lagged behind for some years.

This modernization would allow banks to use blockchain, cryptocurrencies, and smart contracts to carry ordinary processes such as mortgage management, therefore democratizing the entire traditional system and allowing distributed, decentralized ledger and contract processes to work in tandem with financial institutions.

Interestingly, the Popular Party’s proposals also include tax incentives for fintech and blockchain development companies that establish their operations in Spain, in order to encourage the evolution of decentralized finance technology for the purposes of making it a mainstream feature in Spain.

These tax cuts are estimated to be available up to 25% should the Popular Party be able to exercise these proposals.

Given that the Bank of Spain has slightly raised its 2021 growth prospects for the Spanish economy from 6% to 6.2% for this year, and for next year, the forecast is being bumped up from 5.3% to 5.8%, this is an opportune moment to propose such a revolutionary democratization of the entire Spanish banking system, and one that, if proceeded with, would be a leading example to many other well-organized free market economies.