Legal regulations of cryptocurrency in Germany

Germany is one of the first countries in Europe, which drew attention to the cryptocurrency and achieved at least some kind of legitimacy. Legal regulation of the cryptocurrency in Germany began in 2013 by the Decree of the Minister of Finance. Bitcoin is defined as a unit of account, which can be used in trade relations of a private nature.

However, the cryptocurrency itself has not received the status of foreign or electronic currency, but it has been defined as “private money”. This suggests that, privately, you can make transactions with the crypto currency, but there is still no regulation at the interstate level.

Since 2017, after the updating of the national regulatory framework, the German Federal Government has designated Bitcoin as a “financial instrument” (Rechnungseinheit).

Cryptocurrency taxation in Germany

Since transactions with cryptocurrency were privately recognized at the legal level, this led to changes in the tax legislation: in cases where less than 12 months have passed between the purchase and sale of the cryptocurrency, an income tax is levied. If the period between the purchase and sale transaction is over one year the income received from the sale of the crypto currency is not a subject to taxation.

If we talk about the mining of the cryptocurrency and the tax on increasing of the capitalmarket value, then this tax is not levied. This type of tax can be applied only in relation to shares, bonds and other securities that were acquired for the purpose of further resale in the market and obtaining material benefits. Since Bitcoin mining is a process of creating the value of a currency unit, it is taxed on income.

License for cryptocurrency in Germany

Registration of cryptoexchange in Germany is a bit simpler than in other countries.

Companies that link their activities to cryptocurrency operations in Germany will be referred to financial companies.

Such companies are required to obtain the appropriate license and follow its clear requirements:

• the authorized capital of the company must be at least 730 thousand euros;
• tosubmit reports timely to the Federal Office of Financial Supervision (BundesanstaltfürFinanzdienstleistungsaufsicht (BaFin)).

In Germany, the center of the cryptocurrency is Berlin, where there is the largest and most innovative Bitcoin community, called Bitcoin Kiez. This business association, which combines the largest network of crypto-sites throughout Europe, aims to promote and expand the influence of the crypto currency, not only in Germany, but all over the world.

Germany is one of the legitimate countries in Europe with respect to operations with cryptocurrency, and the registration of crypto exchanges will not make any serious difficulties, since there is a clear set of regulations on crypto-currency, in particular at this stage bitcoin is applied both in the banking sector and for payment in retail trade networks.