• Germany as the most crypto-friendly country
• Draft by the Federal Ministry of Finance on the tax regime for crypto assets
• EU: regulation instead of “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 is awaiting Biden’s crypto regulation bill.
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Tax regulation draft
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 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 in the federal states and is intended to provide clarity on 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 a year, crypto assets, especially Bitcoin and Altcoins such as Ethereum, remain tax-free, and lending and staking do not lead to an extension of the deadline either.
The EU and the “Wild West”
At the European level, the EU directive MICA (Markets in Crypto Assets) is intended to form a uniform legal framework for trading in crypto assets. MEPs in charge told Reuters the regulatory directive, set to come into force in early 2023, is the first of its kind and would end the “cryptocurrency wild west.”
The top priority of the paper 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 that took the crypto industry down with it, the EU directive pays special attention to securing stablecoins.
Furthermore, all transactions over 1,000 euros must be reported by the crypto exchanges in the future, even if they are carried out via so-called “unhosted wallets”, which has already drawn criticism from the crypto community. The criticism that larger transactions can no longer be carried out anonymously has been noted, but anti-money laundering measures could nevertheless become mandatory.
Providers should also disclose data on energy consumption and environmental impact in environmental balance sheets. Bitcoin and assets from the decentralized financial system seem to be excluded here, as no single company is responsible for them. Demands for this obligation to disclose environmental impact to be extended 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 strict regulation of stablecoins in addition to the disclosure requirements for anonymous transactions.
International cooperation on crypto regulation
The UK Treasury and Economy Department 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. Since the crypto ecosystem resembles the traditional financial system – intentionally or unintentionally – there is an urgent need for uniform regulations to protect investors.
Germany’s crypto future
“We want to make Germany the leading location for start-ups and growth companies,” said Federal Finance Minister Christian Lindner to the FAZ, referring to his agenda digitalization 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 attest 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.
Editorial office finanzen.net
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