Introduction
The European Union has managed to contribute at least 22% of all economic activity in the globe. In 2018, the gross domestic product of the EU exceeded $18 trillion. Cryptocurrency investors and advocates are watching the EU very closely. Any decision that is made by the EU about digital currencies will impact the global market as well as enterprise adoption of blockchain technology. The European Union has been solidly divided on the role Europe must play in the digital currency and blockchain ecosystem. The state members of the EU have their own policies and attitudes toward Cryptocurrencies. In this article, we cover EU crypto regulations according to the regions that come under its territory. We also will cover the Crypto taxation outlook of the EU countries. Let’s get started.
Crypto Compliance Outlook of the EU
Most of the member states in the EU, token trading and ICOs are evaluated on the basis of case by case. However, questions of utility VS security tokens are still on the way. Issues regarding regulating white label Cryptocurrency exchange are still in play. In this article, we will be covering a few of the member states of the EU, reviewing their policies.
In 2012, the Europe Central Bank managed to become one of the first regulatory bodies who wrote about Cryptocurrency as an emerging trend. The ECB and EU have released new reports, general rules about Cryptocurrencies.
Regulatory in the EU has considered Cryptocurrencies as a lawful activity. However, they do not consider digital currencies as money for traditional means of exchange and commerce. Although, Cryptocurrencies are not discouraged or prohibited in the EU, the Europe Central Bank has not intended to issue a blockchain-based currency as a replacement for the euro.
Exchanges and other service providers are not regulated at a regional level. Nonetheless, the EU and ECB leave exchange regulation up to the judgment of member states. When a Crypto exchange receives approval from the national government, approval functions as a passport for operation around the Eurozone.
In 2018, the EU agreed on the text for the Fifth Money Laundering Directive. This directive will include every Cryptocurrency exchange that put forward fiat conversion. As regulated institutions under money laundering legislation of the EU, crypto exchanges will need to execute KYC and CDD (Customer due difference) on every exchange user.
The mixture of regulations and initiatives that have been taken by individual member states of the EU has made it quite complex for blockchain startups to establish themselves in the EU. There are seven EU countries that recognized the hidden challenges of navigating several regulations. These seven EU countries have started an initiative, known as “Mediterranean Seven”.
The objective of this initiative is to encourage the use and development of blockchain technology. These EU countries involve France, Spain, Italy, Greece, Malta, Portugal, and Cyprus. Now, let’s discuss the EU states’ attitudes towards Cryptocurrency.
France
Crypto Regulatory Sandbox: Only two ordinances on blockchain technology have passed the French legislature. The first ordinance recognized a fine definition of Cryptocurrencies in French law as a type of coupon. The second ordinance uncovers those hidden potential utilizations toward financial instruments, but Cryptocurrencies still continue to be mainly unregulated in France. France’s markets regulator, AMF is considering a regulatory sandbox that is meant to study the impact of security tokens in the European Union.
The government of France has indicated signs towards increased regulation and legislation in the upcoming years. Bitcoins and cryptocurrencies are not legal tenders in the EU. However, the ownership of such currencies is legal.
Trading Ban – No
Banking Ban – NO
Tax Haven Region– No
Best Place for License– No because French regulators have recently released strict rules of licensing for digital asset service providers.
Germany
Crypto Regulatory Sandbox: The Germany Federal Financial Supervisory Authority (BaFin) has undertaken the regulation of Cryptocurrency exchanges in Germany. If you are willing to open a Cryptocurrency service that trades these virtual currencies that are qualify by BaFin, you will require approval from BaFin.
The Germany Federal Financial Supervisory Authority makes regulations on ICOs on the basis of case by case. It does not include any kind of guidelines for what makes a token a security versus a virtual currency.
Trading Ban – No
Banking Ban – NO
Tax Haven Region- Yes, foreign investors do not have to bother about the taxes on interest burden. Germany retains the privacy of account holders.
Best Place for License- Germany harshly regulates crypto assets. A company seeking to do custody for crypto assets is restricted to provide any other regulated financial or banking services, which requires authorization.
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