Spanish courts have begun to confiscate cryptocurrencies in criminal proceedings. How the confiscation is managed, what happens to the seized cryptocurrencies and whether the affected person can deduct the loss.

The seizure of cryptocurrencies in Spain: tax consequences

Confiscation (or confiscation) is a precautionary measure or criminal sanction by which the State confiscates property related to crimes. With the proliferation of the use of cryptocurrencies in illicit activities, Spanish courts and police have developed procedures to seize and manage seized crypto.

When can crypto be seized?

Cryptocurrency seizure may occur in the context of:

Money laundering.
Tax fraud (if the crime is proven).
Drug trafficking or other illicit activities with crypto.
Online scams (the scam crypto can be recovered for the victims).
Pyramid investment.

The Spanish Penal Code (art. 127 et seq.) allows the confiscation of the instruments of crime, its effects and the derived profits.

How is crypto confiscation managed in Spain?

The Office of Asset Recovery and Management (ORGA), under the Ministry of Justice, is the entity responsible for managing confiscated assets, including cryptocurrencies.

The process:

The judge orders a precautionary measure to seize and transfer the crypto.
The police or ORGA itself receive the private keys or access to the exchange.
The crypto is transferred to State wallets.
It is decided: immediate sale or custody until sentencing.

The Public Treasury has sold seized crypto at public auctions, including Bitcoin and Ethereum.

Taxation of the person affected by the confiscation

If the confiscation is final (conviction)

If you are convicted and your crypto is confiscated:

You have lost ownership of an asset.
However, for it to be a deductible loss in personal income tax, it needs to be a transmission.
Confiscation is not a voluntary transfer → the AEAT may not recognize a property loss.
If the ruling recognizes the value of crypto as a basis for economic punishment, it could be argued that there is a forced transfer.

Most probable position of the AEAT: The confiscation of assets from illicit activities does not generate deductible loss (you cannot deduct the loss of the "instrument of crime").

If the confiscation is provisional (precautionary measure) and later revoked

If your crypto is returned to you after a dismissal procedure:

There is no taxable event or loss, because you recover the asset.
But if the price has fluctuated in the meantime, the acquisition cost remains the original.

If the crypto was on exchanges and was blocked

If a Spanish exchange receives a court order to block your crypto:

The cryptos are still yours but you cannot dispose of them.
There is no taxable event.
If the exchange finally transfers them to the State → forced transmission.

Victims of scams and the confiscation of their crypto

If you were a victim of a crypto scam and the scammed cryptos are confiscated by the police:

The State can restore your crypto if it recovers them.
If he cannot return the same crypto to you (they were already sold at auction): you can receive the value in EUR.
The loss of your capital due to the scam is deductible as a capital loss in your personal income tax (see article on losses due to exchange bankruptcy).

The case of Treasury crypto subsectors

The Spanish State has auctioned Bitcoin and other seized cryptocurrencies. This is:

For the State: public income, without taxation (the State does not pay personal income tax).
For the buyer at auction: acquisition price = auction price. Future profits will be taxed on that basis.

Money laundering and crypto: the criminal risk

If you are investigated for crypto-related laundering, the risks go beyond confiscation:

Prison sentence of 6 months to 6 years.
Fine on the value of laundered assets.
Disqualification from professional activities.
Restitution to victims if there are any.

The tax risk is also added: if the income generated by the illicit activity was not declared → tax debt with the AEAT + surcharges + sanctions.

Conclusion

Crypto confiscation in Spain is a growing reality. For legitimate investors the best protection is:

Maintain all documentation of your investments.
Correctly declare your earnings.
Avoid mixing your own funds with third party funds without clear documentation.

Updated: April 2026 | Fiscal year: 2025

Judicial confiscation of cryptocurrencies in Spain: what happens and how they are taxed