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Cryptocurrency in Germany: History, Regulation, Adoption, and Controversies




Cryptocurrency has been gaining popularity in Germany in recent years, with many individuals and businesses adopting digital currencies as a means of payment and investment. In this article, we will examine the history of cryptocurrency in Germany, the legal and regulatory framework governing its use, the state of adoption among businesses and individuals, and any recent developments or controversies.

History of Cryptocurrency in Germany

The history of cryptocurrency in Germany dates back to 2013, when the Federal Financial Supervisory Authority (BaFin) issued a statement on the status of virtual currencies. At the time, BaFin classified Bitcoin as a financial instrument, subjecting it to the same regulatory framework as traditional securities.

In 2014, the German Ministry of Finance recognized Bitcoin as a unit of account, making it eligible for use as a means of payment and exempting it from value-added tax (VAT). This move was a significant boost for the adoption of Bitcoin in Germany, as it provided clarity on the legal and tax status of the digital currency.

Legal and Regulatory Framework

Today, the legal and regulatory framework governing cryptocurrency in Germany is relatively well-defined. In January 2020, the Fifth Money Laundering Directive (5AMLD) was implemented, which required cryptocurrency exchanges and custodial wallet providers to register with BaFin and comply with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

Additionally, in December 2020, the German government passed a new law that allows for the issuance of electronic securities using blockchain technology. This law, known as the Electronic Securities Act, makes it possible for companies to issue digital shares, bonds, and other securities, which can be traded on blockchain-based platforms.

State of Adoption

Germany has been a relatively early adopter of cryptocurrency, with a growing number of individuals and businesses accepting digital currencies as a means of payment. According to a survey conducted by the German Consumer Centers of Hesse and Saxony in 2020, around 8% of Germans own Bitcoin or other cryptocurrencies.

Furthermore, many businesses in Germany have started accepting Bitcoin as a means of payment, including the German branch of Burger King and the travel booking website Expedia. In addition, German banks such as Fidor Bank and SolarisBank have started offering cryptocurrency trading services to their customers.

Recent Developments and Controversies

Despite the growing acceptance of cryptocurrency in Germany, there have been some controversies and challenges in recent years. One of the most significant controversies was the collapse of the German cryptocurrency exchange BitGrail, which lost millions of euros worth of customers’ funds in 2018.

BitGrail was a cryptocurrency exchange based in Germany that allowed users to trade Bitcoin and other digital currencies. However, the exchange made headlines in 2018 when it suffered a hack that resulted in the loss of millions of euros worth of customers’ funds.

The hack occurred in February 2018 when hackers exploited a flaw in the exchange’s software, allowing them to withdraw large amounts of Nano cryptocurrency from the exchange’s wallets. The hack went undetected for several weeks, during which time the hackers were able to withdraw a significant portion of the exchange’s funds.

Another issue that has emerged in recent years is the use of cryptocurrencies for illegal activities such as money laundering and terrorism financing. To address this issue, the German government has implemented strict AML and CTF regulations, requiring cryptocurrency exchanges and custodial wallet providers to comply with the same regulations as traditional financial institutions.

Professional Trader, Social media scholar and a Crypto expert. If you have any comments, suggestions or questions feel free to contact me at [email protected] and i will get back to you shortly.


Kuwait Authorities Unanimously Ban the Use of Virtual Assets





In a collective effort, the regulatory authorities in Kuwait, represented by the Central Bank of Kuwait, the Capital Markets Authority, the Ministry of Commerce and Industry, and the Insurance Regulation Unit, have issued directives to ban the use cryptocurrencies and other unregulated virtual assets within the country.

The Kuwaiti Capital Markets Authority stated in an announcement released on Tuesday that these recommendations are provided by the Financial Action Task Force (FATF) to combat money laundering and terrorism financing. The issued directives impose an “absolute ban” on most digital currency transactions, including their use for payments or investments, as well as the prohibition of mining activities. Additionally, the regulatory authority restricts local authorities from granting licenses to companies seeking to provide services related to virtual assets as business activities.

The announcement states that the comprehensive ban does not include securities and other financial instruments regulated by the Central Bank of Kuwait and the Capital Markets Authority. The primary objective of these directives is to safeguard users from the risks associated with virtual assets. These proactive measures represent a significant step by the Kuwaiti authorities to mitigate the risks linked to investing in such assets, often used for speculative purposes.

The continuous awareness campaigns launched by regulatory authorities in Kuwait caution cryptocurrency users, especially those dealing with popular digital currencies such as Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), and others, about the potential risks associated with their usage and investment.

Moreover, since 2017, the Central Bank of Kuwait has prohibited commercial banks and other financial institutions from processing any transactions involving Bitcoin. In May 2021, the bank reaffirmed the illegality of digital currencies in the country.

Before the ban, Kuwait did not impose taxes on income derived from digital currencies, leaving the door open for investors in the crypto space.

Mining companies had previously shown interest in establishing a base in Kuwait due to its low electricity costs. However, the recent campaign has closed the door on crypto investments and mining activities within Kuwait.

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Unlocking the Tax Maze: Cryptocurrency Compliance in Australia

June G. Bauer



As tax season approaches, cryptocurrency owners in Australia are being urged to be vigilant and comply with tax regulations. With the Australian Taxation Office (ATO) prioritizing capital gains, including cryptocurrencies, individuals who have omitted crypto transactions from previous tax returns may face scrutiny.

According to Sky news, With millions of Australians estimated to invest in digital currencies, the ATO’s data-matching program monitors crypto transactions to ensure tax law compliance. Experts emphasize the importance of understanding capital gains rules and keeping accurate records to avoid potential penalties.

According to Danny Talwar, head of tax at crypto tax calculator Koinly, many Australian crypto owners mistakenly overlook the country’s capital gains rules and their application to digital currencies. While converting crypto into Australian dollars is commonly known to require reporting, individuals must also report instances where one cryptocurrency is used to purchase another. Talwar highlights the necessity of documenting the purchase price, sale price, and market value of the acquired crypto asset. Neglecting proper record-keeping can have serious consequences during tax time. To streamline the process and ensure compliance, utilizing a crypto tax calculator is highly recommended.

ATO Assistant Commissioner Tim Loh advises consulting with a registered tax agent to ensure compliance with tax regulations. Crypto assets are generally subject to capital gains tax, and activities involving crypto often result in taxable transactions. Even selling or withdrawing crypto at a crypto ATM may not qualify for the “personal use” asset exemption. Taxpayers are required to report gains or losses from disposing of crypto assets in their tax returns. Loh emphasizes the importance of maintaining comprehensive records of crypto dealings to accurately report during tax time.

In addition to the crackdown on crypto transactions, the ATO has identified three other priority areas this tax season. Changes to work-from-home deductions now require taxpayers to use the actual cost or revised fixed-rate method (up to 67 cents per hour) rather than the blanket 80-cents-per-hour rate. Record-keeping requirements have also been updated, with Australians working from home obligated to maintain records of all hours worked throughout the financial year. Rental-property deductions, particularly interest-expense claims, are under scrutiny due to previous errors detected in up to 90 percent of landlords’ returns. Furthermore, the ATO will focus on ensuring accurate reporting of income earned from side-hustles and gig-economy work.

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Texas Emerges as a Cryptocurrency Mining Hub

June G. Bauer



Everything truly is bigger in Texas, and that includes cryptocurrency mining operations. The Lone Star State currently boasts the largest cryptocurrency mining facility in North America, accounting for approximately 15% of global mining operations, according to researchers.

However, along with the massive scale of these mining operations comes an equally large power consumption. Cryptocurrency mining involves running complex computation algorithms to validate transactions, and the more calculations a computer can solve, the higher the chance of receiving cryptocurrency rewards, such as Bitcoin, explains the Texas Comptroller.

“In a nutshell, mining Bitcoin is an extremely energy-intensive process. This is why the computing demands have reached a level where they rival the electricity consumption of entire cities,” explains Le Xie, a professor in the Department of Electrical and Computer Engineering at Texas A&M University.

By 2023, the Texas Comptroller estimates that cryptocurrency mining facilities in the state could demand as much power as Houston, the fourth-largest city in the U.S. Already, these facilities are consuming energy on par with the city of Austin, adds Xie.

Despite the significant energy requirements, Texas political leaders have actively promoted the state as an attractive destination for mining companies, citing the economic benefits they bring to rural areas. However, questions arise regarding the risk these mining operations pose to the Texas energy grid.

Professor Le Xie has conducted extensive research on the impact of mining facilities on the Texas grid. His studies focused on three key areas: grid reliability, carbon dioxide emissions, and wholesale energy market prices.

“Their impact largely depends on how you model them,” explains Xie. If these facilities are modeled as constant demand, there can be a substantial impact on grid reliability, as they require continuous power and may strain the grid during peak periods.

Conversely, if the facilities are flexible and can be turned off during periods of grid instability, they could potentially provide additional energy to support the Texas grid, according to Xie.

The findings from Xie’s team were published in the March issue of the Institute of Electrical and Electronics Engineers Transactions on Energy Markets, Policy, and Regulation, as well as the June issue of Advances in Applied Energy.

“We are pleased to share that the models and data we have utilized can be beneficial not only in Texas but also across the country. They provide decision-makers with insights into the performance of mining facilities during stressful situations,” states Xie.

As the cryptocurrency mining industry continues to expand in Texas, further research and careful consideration of its impact on energy consumption and grid reliability will be crucial to ensure sustainable growth and stability in the state’s energy infrastructure.

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