In this article, we’ll take a closer look at recent cryptocurrency regulations in Germany with their legal framework, taxation, and other details.
Are Cryptocurrencies Going Mainstream?
The history of cryptocurrencies has started in 2008 when Satoshi Nakamoto released a White Paper about an opportunity to create a digital equivalent to fiat money with the help of cryptographic methods. The first Bitcoin was issued in 2009 and it cost 0,07 USD. Since then, ca. 4000 cryptocurrencies were created.
Since Corona Pandemics, Bitcoins and other digital currencies gain more interest and acceptance. El Salvator became the first country in the world which declare Bitcoin as an official payment instrument. But also Bitcoin and other cryptocurrencies are getting accepted in online shops and stores everywhere in this world. Well-known banks like UBS Group AG which is a Swiss multinational investment bank and financial services company founded and based in Switzerland have announced, that it is going to allow their clients to buy and sell cryptos. It is going to be a milestone for other private banks. Because of the high volatility of Bitcoin and other cryptocurrencies, it is a great opportunity to trade cryptos. Many crypto exchanges are reliable for trading.
Cryptocurrencies are still very new compared with Fiat money or other financial instruments, therefore, the tax and other regulations are still being created and improved. In September 2020, the EU has announced the regulation „Markets in Crypto Assets“ which is supposed to be implemented in the national law of European countries.
Cryptocurrency Regulations in Germany
Germany is still at the beginning of crypto-regulations. While institutional crypto investors can officially invest in cryptocurrencies since the new law was passed on the 1st of July 2021, there is still no regulation for private crypto investors. Besides, there is still no exact law on taxation on cryptocurrencies. It is just sure that there is a tax-free limit of 600 Euros for private persons and private persons do not pay any taxes on profits if they hold cryptocurrencies for at least one year.
Unfortunately, many potential buyers of cryptocurrencies are afraid that it is still insecure to buy, resell or trade cryptocurrencies, but this market is being more and more regulated, especially in Germany.
The German Minister of Finance has taken a dim view of stable coins in the past, calling them a “wolf in sheep’s clothing”. ‘Private’ stable coins have been a contentious sue to central bankers they view the assets as having a potentially destabilizing factor to state fiscal policies.
Germany has in some locations Bitcoin machines like Atm, which allows you to buy Bitcoins legally, these type of improvments in Germany and also around the world give people trust and a secure feeling about cryptocurrencies.
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What's BaFin License And Why Do You Need It?
Germany’s financial market regulator is BaFin, BaFin is also responsible for investors and their security and protection. BaFi licence protects you from scams and illegal works.
For BaFin cryptocurrencies are not money or any kind of currency, it is seen as units of account
BaFin licence is not required for normal users unless their mining or doing a commercial transaction but there could be difficulties if there is not a BaFi licence, for security buy/sell users can also apply for it.
New Security Methods On Blockchain From Germany
In December of 2020, Germany passed a law that enabled financial securities to be held on the blockchain. This means that issuers/holders are now able to document their securities on a blockchain-based register – where as previously securities transactions must have been recorded in physical Form. However, this is so-far only applicable to bonds, and not publically traded stocks/shares.
Cryptocurrency & Blockchain Consultation in Germany
For a traditional user it is confusing at the beginning to buy, store, stake and trade cryptocurrencies. Our team would be glad to consult you in the field of cryptocurrencies. Our consulting include:
- Advisory, how to buy, store, stake and trade cryptocurrencies
- Advisory about the investment opportinities in the field of cryptocurrencies
- Advisory how todownload, secure and store crypto-wallets
- Advisory for Crypto-Projects and Start-Ups
White Paper Consultation
International Legal Compliance
Tax Compliance Services
AML / KYC Consultancy
Seed / A-B-C Investment Consultancy
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All rights reserved. All rights of Cryptocurrency Regulations in Germany article belong to Gurcan Partners. The author has no responsibility for the information in this article. This article is prepared just to inform.
Att. Ieva Thibodeaux
Simge Ayse Pala LLB
Gurcan Partners Düsseldorf Office