Germany, one of the largest economies in Europe, is arguably not considered a particularly pro-Bitcoin country. However, the country has for many years taken a favorable stance towards investing in the blockchain and crypto sector by introducing increasingly progressive legislation. Additionally, Germany has the highest number of Bitcoin nodes across the world, second only to the United States, reflecting a strong commitment to blockchain and the crypto industry in general.
Previously, like Portugal, Germany had implemented a national blockchain initiative. Within this framework, 44 concrete measures have been developed to unlock the advantages offered by blockchain technology. From January 2020, the country authorized banks and financial institutions to offer crypto-asset custody services: the license is issued by the country’s regulator, the BaFin (theFederal Financial Supervisory Authority), which obviously implies high regulatory requirements and the application of standards similar to traditional financial markets.
In 2021, new legislation allowed “Specialfunds”, institutional investment fund managers, to allocate up to 20% of their portfolios in crypto-assets: this initiative was considered a huge step forward which strongly legitimizes crypto-assets as investment instruments . In the same year, the German government made explicit mention of the blockchain and the crypto sector in a program that underlined its commitment to creating a digital state: the government agreed to make Germany one of the main locations in Europe for fintech platforms, as well as for consumer-oriented financial applications (e.g. robinhood), which allow you to trade stocks and other investment options. A notable paragraph includes a provision to allow the issuance of tokenized shares as the previous government ofAngela Merkel had already passed a law that ended the requirement to hold a paper certificate for the sale of a security, openly seeking to advance the use of blockchain in the country.
One of the most recent major changes in favor of the crypto industry is the adoption of a measure which allows holders of cryptocurrencies to be exempt from taxes when selling crypto-assets, provided that a year has elapsed between the date of acquisition and the date of sale. Previously, cryptocurrencies that were resold or placed in staking had to be kept for a period of 10 years before they could be exempted.
All these positive developments should not make us forget that the new government has stated in a document its intention to “constructively support the process of introducing a digital euro in addition to cash, accessible to all as legal tender in Europe for general use.” This 24-page document covers many topics related to the crypto space, such as mining, staking and token airdrops.
The impact of these regulations on the growth of the crypto sector is already causing some concern. As is often the case in many countries, poorly enforced regulation could backfire on the crypto ecosystem, especially if regulators fail to consider suggestions from industry players. Given the constantly changing landscape of the sector, regulators are feeling their way and how they deal with new issues that arise will be crucial to the future of this industry.
Many certainly remember the virulent remarks of the German Chancellor Olaf Scholzwhen he was finance minister, about Libra : “(…) Germany and Europe cannot and will not accept its entry into the market until the regulatory risks are adequately addressed.” He also added: “We must do everything so that the monopoly of the currency remains in the hands of the States.”
Nevertheless, the current crypto-friendly policies, extensive regulation, and slow but still growing acceptance of blockchain technology and the crypto industry may make Germany one of the most important blockchain business hubs in Europe. Berlin, the German capital, is also one of the main places where it is possible to spend cryptocurrencies.
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