ETFs in this article
Forex in this article
Low taxation of crypto profits in Germany
German legislation is particularly crypto-friendly
Dynamic crypto business scene in major German cities
In the latest ranking by Coincub travel guide, Germany has risen to number one among the most crypto-friendly countries in the world, ahead of Singapore, the US, Australia and Switzerland. China is in last place. What is the reason for the good German performance? What advantages does Germany offer crypto investors?
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High blockchain adoption
Germany was one of the pioneers in terms of a national blockchain strategy. In 2019, regulations were passed on how to use the innovative technology for digital transformation to make the country an attractive center for the development of blockchain, web3 and metaverse applications. One part of the legislation is the obligation to have a crypto custody license, which must be applied for from the Federal Financial Supervisory Authority (BaFin) if a company wants to manage and store third-party digital currencies.
The “German Savings Banks and Giro Association”, a network of 400 savings banks, was able to build on the transparent laws and guidelines. The association developed fintech blockchain applications to enable customers to buy and sell cryptocurrencies, according to CoinTelegraph. Almost 50 million customers can use this service including their own crypto wallet.
In addition, companies such as Volkswagen, ABOUT YOU or SAP have developed various NFT, Metaverse, Web3, Govtech and crypto payment applications that are widely used in e-commerce.
Low crypto taxation in Germany
Another important reason for Germany’s crypto-friendliness is likely to be its low taxation. Similar to some other countries such as Malta, Cyprus or Portugal, crypto profits are tax-free for private individuals in Germany, provided they have been held for at least one year. For investments in Bitcoin, Ether and Co. with a holding period of less than one year, there is a tax allowance of 600 euros. In addition, the German regulations offer the advantage that losses can be declared for tax purposes and offset against other sales transactions. Only entrepreneurial crypto activities such as bitcoin mining are subject to tax in Germany.
German financial sector enjoys great freedom in the crypto market
The German regulations also give the financial sector a lot of freedom for crypto commitments. According to the German fund location law, pension funds, insurance companies, family offices and corporate investment funds may invest up to 20 percent of their investment volume in digital assets. There is also a new Metaverse exchange traded fund on the XETRA electronic exchange, namely the Roundhill Ball Metaverse UCITS ETF launched by Roundhill Investment. With the help of this passive fund, investors can invest broadly in the mega trend Metaverse.
Crypto industry in Germany: Many up-and-coming startups
2.6 percent of Germans have already invested in cryptocurrencies, and as many as 44 percent are interested in getting involved in the crypto market, according to a recent report by KuCoin. According to a “triple-A” statistic, as many as 18 percent of Germans in the younger age group of 18 to 24 own digital currencies. Germany also has the second highest number of Bitcoin and Ethereum nodes after the USA.
In addition, Germany is a vital center for many crypto companies. With Northern Data, the largest European mining company has settled in Germany, which generates new Bitcoins almost exclusively using renewable energies. Berlin in particular is an attractive city for crypto startups – well-known examples such as the companies Denario or Penta are evidence of this. But there are also some promising blockchain companies in Cologne (e.g. Nextmarket), Hamburg (Paycer), Munich (Forget Finance) or Frankfurt (Northern Data).
In addition, several major German corporations are involved in cryptocurrencies, NFTs and metaverses. For example, adidas recently partnered with Bored Ape Yacht Club and with Prada for a climate-related NFT art project that pursues charitable causes. Volkswagen also launched an interactive NFT advertising campaign, which is enjoying great popularity on the Internet.
Germany: Pioneer in the fight against cybercrime
Another plus point for the German crypto location is Germany’s courageous approach to cybercrime. The dismantling of the servers of Hydra, the darknet marketplace with the highest turnover in the world, by the German Federal Criminal Police Office is impressive proof of this. Since its launch, over $5 billion worth of obfuscated bitcoin transactions have been conducted on the Russian-language dark web Hydra. Gurvais Grigg, CTO for the public sector at Chainanalysis, told Cointelegraph: “The takedown of Hydra is notable not only because it was the largest dark web market, but also because it offered money laundering with which Cryptocurrencies could be exchanged for Russian rubles.”
In contrast to other digital topics such as Internet speed, Germany has done good innovation work in recent years, at least in the area of digital currencies, which is now beginning to bear its first fruits.
Editorial office finanzen.net
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