Crypto In Germany

In today’s world, it is accurate to say that cryptocurrency is going mainstream. Back in the day terms like mining and blockchain were only known to a few individuals, deep into the crypto niche rabbit hole, but not anymore. Today crypto is everywhere, in fact, it’s difficult to pretend you’ve never heard of it. 

Both Wall Street and Main Street are going deeper and are heavily invested in crypto for the long term, proving once and for all that no, crypto isn’t just a fad. And with all the adoption, even governments around the world are jumping on the crypto train. El Salvador has gone as far as making crypto its legal tender, and many more countries are opening up to it. Today we’ll be taking a look at how crypto works in Germany, so let’s get into it.

Is crypto legal in Germany? 

Yes, like in most countries cryptocurrency is perfectly legal in Germany. According to BaFin regulation citizens are allowed to exchange their coins. However, crypto is not considered legal tender in Germany. 

Different types of regulations apply depending on the crypto activity you are involved with. For starters, professional crypto day trading is considered a commercial activity that will be taxed accordingly. However, crypto futures and other derivative products across many other European countries are usually not available. While not officially banned the German government has urged exchanges to remove these products due to them not satisfying regulatory standards. 

Furthermore, commercial mining while legal can only be done with a BaFin license.

Overall Germany has not adopted strict anti-crypto regulation, but neither can its stance be called completely favorable to crypto adoption.

Crypto taxes in Germany

Crypto is not taxed in Germany if the total profit is less than 600 euros at the end of the year. However, if the profit exceeds 600 euros then the crypto earning will be counted just like any income such as wages. The German Income Tax Act makes it clear that crypto is taxable both when swapping one crypto for another and when swapping for fiat currency.

The amount owed in taxes depends on the traders' tax bracket as it counts as ordinary income.

However, the story is very different for long-term investors. If you hold your cryptocurrency for over a year you won’t have a tax liability even if the crypto increases in value. 

Why should Germany adopt crypto?

In an extremely solid economy such as Germany, crypto presents a huge opportunity. Via the blockchain the middle man in a transaction is cut out, allowing for completely P2P exchanging. This means that any time you’d be buying a service or product from a business the funds would go directly to their wallet without passing a centralized exchange. 

Blockchain technology means that there'll be no cut or fee that goes to credit and debit card providers and no day or so wait to receive your funds. Crypto allows for extremely fast and cheap transactions in ways not possible with traditional finance. On top of that, transactions with crypto excel at being reliable, meaning that your cryptocurrency will always reach its destination with no risk of loss of funds.

The future of crypto in Germany

In April 2023, the German government started working on a new financial law that might result in the country getting an even more crypto-friendly reputation.

The proposed legislation, dubbed the Future Financing Act, seeks to enable businesses to offer crypto shares - either in the electronic or traditional form - that can be recorded on either the central register or the blockchain. 

The aim of this law is to facilitate the accumulation of private assets and attract additional private capital for future investments. By enhancing access to the capital market, the authors hope that the legislation will benefit startups involved in financial innovation. 

Additionally, the act proposes to decrease the minimum capital required for Initial Public Offerings (IPOs) from €1.25 million to €1 million, which will further assist new companies.

Conclusion

Germany has been adopting some crypto-friendly regulations with its change of the tax code, however, the journey to crypto adoption still continues. Germany is one of the strongest economies in the world, and having an open approach to cryptocurrency would undoubtedly make it one of the leading countries for cryptocurrency. And if you want to learn more about crypto regulations in different countries like South Korea, Brazil, UAE, Australia, Nigeria, Mexico, India, Russia, USA — make sure to follow the updates on our Blog, more posts are coming soon. Furthermore, you are always welcome to exchange crypto on SimpleSwap!