Bill: Germany May Lead in Crypto Regulation Across Europe | news

• Germany as the most crypto-friendly country
• Draft of the Federal Ministry of Finance on the tax regime for crypto-assets
• EU: regulation instead of the “wild west”

In the second quarter of this year, Germany shares the top spot with the US, which has a significantly larger crypto industry but has so far only seen regulatory efforts at the state level and awaits Biden’s crypto regulation law.


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Draft tax regulation

Crypto assets are not subject to the same tax reporting requirements as traditional investments, as cryptocurrencies can be traded without the financial institutions responsible for reporting to the tax authorities.

In Germany, a draft tax regime for crypto-assets issued by the Federal Ministry of Finance was recently presented in cooperation with the competent authorities of the federal states and aims to clarify the income tax treatment of crypto-assets. Not only investments in cryptocurrencies, but also mining, staking, lending, airdrops and commercial crypto-assets are taken into account in the tax regulation. After being held for one year, crypto-assets, especially Bitcoin and Altcoins such as Ethereum, remain tax-free, and lending and betting also do not lead to an extension of the deadline.

The EU and the “Wild West”

On a European level, the EU directive MICA (Markets in Crypto-Assets) must form a uniform legal framework for trading in crypto-assets. The MEPs in charge told Reuters that the regulatory directive, due to come into effect in early 2023, is the first of its kind and will end “the Wild West of cryptocurrency.”

The paper’s top priority is the protection of investors: the directive obliges providers to prove that their cryptocurrencies are secured by deposits. After the experience of the Terra/LUNA coin crash, which took the crypto industry down with it, the EU directive places special emphasis on securing stablecoins.

Furthermore, all transactions over 1,000 euros must in future be reported by the crypto exchanges, even if they are carried out via so-called “unhosted wallets”, which have already received criticism from the crypto community. Criticism that major transactions can no longer be carried out anonymously has been acknowledged, but anti-money laundering measures may still become mandatory.

Providers should also publish data on energy consumption and environmental impact in environmental balance sheets. Bitcoin and decentralized financial system assets appear to be excluded here, as no single company is responsible for them. Demands to extend this environmental impact disclosure obligation to other sectors have already been made online.

The new EU directive was praised in the media as prudent and reasonable, but there is criticism of the tight regulation of stablecoins in addition to the disclosure requirements for anonymous transactions.

International cooperation on crypto regulation

The UK Treasury sees potential in stablecoins, but also wants to regulate them more strictly and give the Bank of England more powers, according to a consultation paper.

Fed Vice Lael Brainard recently made similar demands for the regulation of the crypto industry at a Bank of England conference in London. As the crypto ecosystem resembles the traditional financial system – intentionally or unintentionally – there is an urgent need for uniform rules to protect investors.

Germany’s crypto future

“We want to make Germany the leading place for start-ups and growth companies,” Federal Finance Minister Christian Lindner told FAZ, referring to his agenda. digitization of the capital market includes the crypto industry.

Germany is well positioned when it comes to crypto, has the most progressive legislation and the most favorable tax regime for investors, experts also confirm in an article on BTC-ECHO. Germany’s position as the most crypto-friendly country can also be seen from the fact that it is the only country with an official blockchain strategy.


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