The German Federal Ministry of Finance, with support of Germanys Bundesbank, has determined that digital currency is not a real currency. It asserts, incorrectly, that cryptocurrency doesnt 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 countrys national monetary system, it cannot be considered a valid currency.
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 hasnt 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 Germanys Bundesbank, has determined that digital currency is not a real currency. It asserts, incorrectly, that cryptocurrency doesnt 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 countrys 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.
Frances 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.
About Jason Simon
Jason Simon is a FinTech and digital payments expert who became involved in cryptocurrencies when they were first introduced. He enthusiastically follows what is happening in the evolving world of finance, excited about the prospects digital currencies offer global consumerism. When hes not involved in helping advance the digital payments space, he enjoys spending time with his family and improving his community.