As cryptocurrencies continue to receive more attention around the world. Many countries have begun to address their status from a legal and regulatory standpoint. While most developed countries have been more accessible to the ecosystem, a few have still not been able to determine how best to address the framework that will allow digital currency to continue to progress. Jason Simon is a FinTech and cryptocurrency expert that follows developments in the space, especially as they pertain to regulations. He has already provided a general overview of how the European Union (EU) is approaching the subject and now takes a closer look at a few of the countries in the EU that are creating their own frameworks.
Germany, with a very robust economy, is often seen as a world leader when it comes to the implementation of new regulations. However, in terms of digital currency, it hasn’t been completely willing to acknowledge its importance. The German Federal Financial Supervisory Authority BaFin) qualifies virtual currencies/cryptocurrencies as units of account and, therefore, financial instruments, not currency. Simon asserts, “The German Federal Ministry of Finance, with support of Germany’s Bundesbank, has determined that digital currency is not a real currency. It asserts, incorrectly, that cryptocurrency doesn’t fulfill the typical functions of currency, which it has already been proven to do. However, until Germany recognizes Bitcoin and others as part of the country’s national monetary system, it cannot be considered a valid currency.”
Italy has been somewhat more flexible with its approach to cryptocurrencies. It has several pieces of legislation in place that address issues such as taxation and legal use, but has not gone so far as to consider digital currency a legitimate currency on the same level as the euro. It does, however, consider it to be a currency on the level of other currencies, such as the former lira. Italy is also now reviewing several bills that target anonymity in an effort to ensure the use of digital currency can meet requirements established by international governing bodies on the subject of money laundering and anti-terrorism funding.
Luxembourg is another EU country that has been open to cryptocurrency. Explains Simon, “Luxembourg appeared to be ready to embrace Bitcoin as soon as it was introduced and has welcomed many entities in the digital currency space. In June 2017, Pierre Gramegna, the Minister of Finance of Luxembourg, recognized before Parliament that cryptocurrencies are actual currencies because ‘they are accepted as a means of payment for goods and services by a sufficiently large circle of people,’ as he put it. He also stated that there was currently no regulation from a monetary perspective regarding cryptocurrencies, but added that cryptocurrency dealers in the country are bound by the same rules as any other financial service providers with regards to the fight against money laundering and terrorism financing. Gramegna, in 2018, stated that cryptocurrencies and blockchain technology were both an ‘unavoidable phenomenon that brings added value and efficient services to consumers.’”
In Spain, cryptocurrencies have been somewhat welcomed, but there is still no official framework on them as a currency. However, legislation exists to prevent their use in conjunction with money laundering and terrorism financing, as well as tax implications. New legislation is being drafted that is said to be “friendly” to the ecosystem. That legislation is expected to contain tax breaks for certain blockchain companies in order to attract more of the technology sector to the country.
France’s government has begun to work on a legal framework covering cryptocurrency and digital assets with the goal of becoming a pioneering and key player in the ecosystem on an international level. Two recent studies, one commissioned by the Minister of the Economy and Finance and the other by the National Assembly, offer detailed analyses of cryptocurrencies in the country and made several policy proposals. Both reports agree on the importance of establishing rules that will provide clarity and security while, at the same time, allowing a great amount of flexibility so that the cryptocurrency sector can mature through experimentation.