Over the last couple of weeks, the world of cryptocurrencies had been set ablaze with heavy news from all corners of the world. Primarily, this is due to innovations, and entire conglomerates start accepting and using blockchain technology to achieve their goals. To this end, Germany has become one of the first countries in Europe to accept that blockchain is here to stay and leverage it to get the best results. The cabinet of Germany recently voted to include using blockchain technology in the securities sector. This is to increase activity in securities exchange and to be able to monitor what’s going on to keep fraudsters and malicious people generally away.
Germany has always been a hotspot for cryptocurrency activity. The cabinet decided to embrace the changes and make them valuable to the nation to leverage said activity and control the vices that come with it. The country previously required all securities holders and insurers to record activity, purchase, or sell items on paper certificates. When this particular law was passed, it was meant as a deterrent against fraudsters and the like. Today, however, with the new law in place, the paper certificates are now replaced with an easy entry onto a central securities depository, kept safe and maintained by the bank.
If you are a blockchain enthusiast or would like to access your documents at a moment’s notice, you can choose to have the records placed in a blockchain-based repository. From there, using the cryptographic keys provided, you can quickly get access to your certificates with the push of a button. Records in blockchain are immutable and unchangeable and once committed to the blockchain, it forms the perfect security certificate. Additionally, although many may have some sentimental attachments to the way things were done before, Olaf Scholz stated that continuing that way was not sustainable. By embracing this new way of doing things, banks can process requests much faster without drawbacks. By accepting electronic securities, industries can then cut administrative costs and other expenditures related to paper certificates.
His colleague in the justice ministry, Christine Lambrecht, said that this new law would help relieve many ambiguities in securities law. It will also provide proper definitions and wording for some of the more challenging emerging issues such as DeFi. In passing the new law, innovators in financial technology can be highly motivated to create something that makes the process much smoother without errors. Simultaneously, the cabinet created a sense of legal certainty in an area characterized by constant technological innovations.
The bill, introduced by the Finance Ministry I August, was created to protect the German stock markets’ transparency, integrity, and functionality. As part of the announcement, the company also revealed that the Federal Financial Supervisory Authority (BaFin) would monitor these electronic securities’ issuance. It will also be responsible for maintaining a comprehensive digital ledger.
Fiscal Treatment of Altcoins in Germany
In Germany, the laws surrounding cryptocurrency and its underlying blockchain technology has always been lax. No explicit legal provisions are governing whether they should be taxed or not. However, it’s essential to know that crypto is considered an intangible asset in Germany and therefore does not qualify to be legal tender. Although the crypto itself is not taxed, gains from selling any crypto require some taxes to be paid. In the case of a private individual, Section 22 No. 2 and Section 23 (1) No. 2 of the German Income Tax Act will suffice.