In her monthly Expert Take column, Selva Ozelli, an international tax attorney and CPA, covers the intersection between emerging technologies and sustainability, and provides the latest developments around taxes, AML/CFT regulations and legal issues affecting crypto and blockchain.
Germany has risen to the top spot of Coincub’s guide to the most crypto-friendly countries in Q1 2022. The European country allows its long-term domestic savings industry to utilize crypto investments, supported by its zero-tax policy on long-term capital gains from crypto, and its number of Bitcoin and Ethereum nodes is second only to the United States.
In 2019, Germany was the first country to adopt a blockchain strategy to harness the technology’s potential for advancing digital transformation and to help make it an attractive hub for the development of blockchain, Web3 and metaverse applications in fintech, climate tech, business and govtech, including Germany’s digital identities project.
The German Savings Banks Association — a network of 400 savings banks in German-speaking countries — started developing fintech blockchain applications to enable customers to buy and sell cryptocurrencies. Various companies such as Volkswagen, About You, SAP, BrainBot and BigchainDB have been developing NFT, metaverse, Web3, govtech and crypto payment applications that are widely used in e-commerce to purchase goods. Jacopo Visetti, an adviser to C3 — a team of operators and investors who back companies working to reduce emissions — explained to me:
“C3 is a climate tech company developing advanced technological infrastructure allowing to bridge carbon credits from international standards to the blockchain by means of tokenization.”
To fund the development of these technologies, Roundhill Investments, an ETF sponsor focused on innovative thematic funds, launched the Roundhill Ball Metaverse UCITS ETF on the Deutsche Börse Xetra, describing it as Germany’s first metaverse exchange-traded fund. Furthermore, Germany’s Fund Location Act allows pension funds, insurance companies, family offices and corporate investment funds to allocate up to 20% of their assets in digital assets.
As of the end of 2021, approximately 2.6% of Germans have used cryptocurrency. And according to a recent report from KuCoin, 44% percent of Germans are motivated to invest in crypto.
German investors can get involved with crypto and blockchain via companies and platforms such as 1inch Exchange, Nuri, FinLab, Minespider, the NAGA Group, Tangany, Coindex, CryptoTax, Upvest, Fiona, Blocksize Capital, USDX Wallet, Bitbond and the Iota Foundation, or they can shop on Sugartrends using Dash. As Mark Mason, communications and business relations manager at Dash, explained to me:
“Dash is an alternative cryptocurrency that provides financial freedom without borders. It accelerates financial inclusion by allowing people to use their phones as bank accounts. It is decentralized, permissionless and censorship-resistant.”
The EU’s new Transfer of Funds Regulation also provides disclosure rules for “unhosted” wallets, or crypto wallets not managed by a custodian or centralized exchange. Lone Fønss Schrøder, CEO of the blockchain company Concordium, explained:
“The new draft regulations require significant changes in the way current cryptocurrency transfers are made. It may be a huge challenge for the decentralized crypto solutions that hold anonymity as a core value and are committed to peer-to-peer (P2P) and self-custody. Moreover, many projects could be held back by their community from changing their solutions.”
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Selva Ozelli, Esq., CPA, is an international tax attorney and certified public accountant who frequently writes about tax, legal and accounting issues for Tax Notes, Bloomberg BNA, other publications and the OECD.