Spanish political party, Unión Progreso y Democracia (UPyD), has submitted a proposal to the country's Congress outlining why it believes bitcoin regulation is needed.

The group, a social liberal party, has used the submission to call out for stricter control measures to be placed on the technology in a bid to "improve security and prevent fraudulent and criminal activity".

The document stated:

"Bitcoin should not remain in a legal vacuum, without the appropriate supervision."

UPyD believes that there are currently 40,000 bitcoin users in Spain, and that while this small user base doesn't pose a risk to the larger economy today, measures should be enacted now before the technology becomes more widespread.

In its document, UPyD cites the European Central Bank's Virtual Currency Schemes report, which assesses that bitcoin cannot be considered a form of digital money and as such cannot be subjected to specific legislation.

The report highlighted the various advantages of bitcoin, asserting that its decentralised, cryptographic and anonymous nature are favourable to its users.

However, it voiced its belief that digital currency exchange is inherently risky, claiming that "users can be led astray by criminals, which will take advantage of them to engage in illegal activities or money laundering".

When asked about the proposed legislation, Nacho Robles, a law student and UPyD member, said:

The call for governance comes after El Ministerio de Hacienda y Administraciones Publicas, the Spanish government agency that deals with matters of finance and taxation, issued a ruling stating that bitcoin should be treated as an electronic payment system.

The decision, which came in response to questions from Coinffeine, a Spanish open-source bitcoin exchange platform, established that bitcoin-based online gambling companies in Spain must apply for licenses.

Additionally, the framework stipulated that transactions by bitcoin businesses may be subject to existing laws that impose a cap on cash transactions of €2,500 or more.

UPyD claimed that the lack of regulation could impact central banks in its filing, stating that:

The proposal also touches upon a report by the European Banking Authority (EBA), published on 4th July, which identified "more than 70 risks that affect users, market participants, financial integrity – by facilitating money laundering and other financial crimes – existing payment systems and the regulating authorities".

The party, which considers its proposal to be a response to the EBA's call for short-term regulatory measures, will discuss the issue in Congress on 30th January.

Spanish Congress image via Shutterstock