Spain Slaps DeFi Investor with $10.5M Tax Bill on Crypto-Backed Loan

Spain's tax authority has ignited controversy by imposing a $10.5 million levy on a decentralized finance (DeFi) transaction, treating a crypto-collateralized loan as a taxable capital gain. The Agencia Estatal de Administración Tributaria (AEAT) asserted that merely moving assets into a DeFi protocol constituted a taxable event—despite the investor having already declared all transactions and paid $5.84 million in taxes.

The unprecedented ruling targets the mechanics of DeFi lending rather than realized profits. Critics argue this interpretation lacks legal foundation and could chill innovation in Spain's crypto sector. The case arrives as Spanish authorities intensify crypto tax enforcement, having issued over 600,000 compliance notices to digital asset holders.

Market participants are scrutinizing whether this aggressive stance reflects regulatory confusion about DeFi's trustless architecture. The stablecoin loan in question never involved asset disposals—traditionally the trigger for capital gains taxation—raising concerns about arbitrary enforcement.