What regulation of cryptocurrencies is applied in the EU countries?

Compared to many countries in the rest of the world, the laws on cryptocurrency in most European countries are very favorable. This means that you can easily buy Bitcoin and other cryptocurrencies. Unfortunately, this does not apply to all European countries. There are countries in which activities related to cryptocurrencies are prohibited. In this article, we will look at the basics of cryptocurrency regulation in European countries, as well as where cryptocurrency is allowed, and in which countries it is banned.

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What does the European Union think about cryptocurrency?

So far, the EU has no specific rules regarding cryptocurrencies such as Bitcoin, although it has determined that neither value added tax (VAT) nor goods and services tax will apply to conversions between fiat currencies and cryptocurrencies.

On the other hand, some taxes are still applied to transactions using cryptocurrencies as a means of payment for goods and services, which makes them more complicated due to the instability of cryptocurrencies.

In addition, the European Central Bank (ECB) stated that the traditional regulation of the financial sector cannot be applied to cryptocurrency, since it does not affect other financial entities (banks). The ECB classifies cryptocurrency as a "convertible decentralized virtual currency".

European countries where cryptocurrency is Allowed

Cryptocurrency laws differ in different EU countries. In most European countries, cryptocurrencies are legal, and many sellers acceptpayments are made in cryptocurrency. In Europe, most countries allow their citizens to trade cryptocurrencies. These are the following countries:

• Belgium
• Spain
• Netherlands
• France
• Austria
• Germany
• Croatia
• Czech
• Hungary
• Poland
• Romania
• Slovakia
• Slovenia
• Switzerland
• Albania
• Belarus
• Denmark
• Estonia
• Iceland
• Finland
• Lithuania
• Norway
• Sweden
• Bosnia and Herzegovina
• Bulgaria
• Greece
• Italy
• Portugal
• Irish

Regulation of Cryptocurrencies in Germany

Germany is considered a pioneer in the cryptocurrency market. According to 2024 data, 87% of the adult Internet population in Germany are aware of cryptocurrencies, 18% own them, and 9.2% have owned them in the past.

The speed of the introduction of cryptocurrencies in the country can be considered high compared to the average. One of the recent developments was that the Stuttgart Stock Exchange, the second largest exchange in Germany, opened its cryptocurrency trading platform to all interested traders. Getting access to cryptocurrency in Germany is quite simple: users must be at least 18 years old, they must be residents of Germany, enter the EEA and have a German bank account.

Germany also has a total of 50 bitcoin vending machines, which are mainly located in Munich, Berlin and Dusseldorf.

Back in 2011, the German regulator BaFin stated that Bitcoin and related cryptocurrencies are units of account similar to artificial currencies, and stated that Bitcoin is not a legal currency, but can be used for payments.

The exchange of cryptocurrencies for the state currency and vice versa, the use of cryptocurrencies for payments and mining of cryptocurrencies since FebruaryI 2018 in Germany is considered a tax-exempt activity.

Regulation of Cryptocurrencies in France

France is a world leader in cryptocurrency regulation and is committed to the practical application of the recommendations of the Anti-Money Laundering Group (FATF), thereby anticipating future European regulation in this area.

On April 4, 2024, Decree 2024-387 of April 2, 2024 "On combating the anonymity of virtual assets and strengthening the national fight against money laundering and terrorist financing" was published.

This decree complements the French legal framework applicable to fundraising through the issuance of tokens (ICO) and to the activities of digital asset service providers (DASP), enshrined in the current Law on the Pact of 2024 and Decree No. 2024-1544 of December 9, 2024.

In accordance with these rules, which are among the strictest in the world, companies offering the following services to their customers fall under the obligations of the laws on cryptocurrency in France:

• exchange services between digital assets and legal tender;
• digital asset storage services on behalf of third parties (wallets);
• services for the exchange of digital assets for other digital assets;
• platforms for cryptocurrency trading.

All these players must register with the Autorité des marchés financiers (AMF) before starting their activities in France. This also includes cooperation with intelligence agencies and asset freezes. In particular, companies do not have the right to maintain anonymous accounts and will have to comply with the verification process, carefully verifying the identity of their customers, in particular their bank details.

Therefore, we can say that the rules in France are very strict. This is not surprising, because in the past the country had many problems with terrorism.M. Nevertheless, it is still allowed to pay with cryptocurrencies, although this is not considered legal tender.

Regulation of Cryptocurrencies in Spain

There is no cryptocurrency law as such in Spain. Cryptocurrencies can be bought and sold in exchange for other cryptocurrencies, as well as exchanged for fiat money.

Regulation of cryptocurrencies in Spain is carried out with the help of a new anti-money laundering law adopted on April 28, 2024. The new regulation is mainly aimed at companies offering services related to the exchange or storage of cryptocurrencies.

These companies will have to have procedures in place to identify their customers, so they will have to require identification documents. The Bank of Spain will also create a register of cryptocurrency operators, in which all companies or individuals offering such services will have to register.

Regulation of Cryptocurrencies in the Netherlands

In the Netherlands, it is allowed to own, trade and pay with cryptocurrencies. However, the Netherlands does not consider cryptocurrency to be legal tender. Several laws have been created regulating and controlling cryptocurrency.

For example, in May 2024, a new law came into force that proposed that providers of crypto services, such as exchanges and wallets, register with De Nederlandsche Bank (DNB) to prevent money laundering and terrorist financing.

As for taxation, professional traders trading cryptocurrency must pay a tax of 49.5% on the income received. Retail traders must pay a tax of 16.5% or 25%.

The profit from mining cryptocurrencies is not declared, since according to the tax authorities, mining cryptocurrencies involves large expenses, which makes it difficult to determine the amount of profit received.

Regulation of Cryptocurrencies in Belgium

In Belgium, it is allowed to own, trade, make or receive payments using cryptocurrency. If you are going to travel to Belgium, you have nothing to worry about. When you live in Belgium, there are certain rules you must follow.

Currently, you do not pay taxes if you own cryptocurrencies in Belgium or make payments using them. Officially, cryptocurrency is not considered as a means of payment. However, this is not the case when you will never have to pay tax on your cryptocurrencies in Belgium. Basically it depends on how you use cryptocurrency.

If you follow a buy-and-hold strategy, you don't have to pay taxes. When you use leverage and actively buy and sell cryptocurrencies, then you belong to the category of private investors and must pay a tax of 33% of income.

For professional crypto traders, the amount of tax depends on the amount of your earnings. If you earn less than 12,990 euros per year, you must pay a tax of 25%. If the income exceeds 39,660 euros per year, you pay a tax of 50%.

In which countries of the world is cryptocurrency banned?

Many countries around the world are beginning to realize the value that cryptocurrencies bring to their economy. As a result, modern laws regulating cryptocurrency activities are gradually being adopted.

Some countries that do not accept cryptocurrencies yet will most likely have to follow their example. However, there are still countries that see cryptocurrencies as a threat to their economy. Here is a list of countries where cryptocurrency is banned:

• Kyrgyzstan
• Bolivia
• Bangladesh
• China
• Iran
• Nepal
• Thailand
• India
• Denmark
• Ecuador
• Morocco
• Algeria

China differs from other countries in that it is in a rather difficult situation. First, China banned ICOs, then mining and cryptocurrency trading fell under the ban. This has had a huge impact on the entire bitcoin chain as a large number of miners are located in China.

Conclusions

If you live in Europe or are going on vacation to a European country, you don't need to worry about cryptocurrency regulation. In every country in Europe, the use of cryptocurrencies is allowed. The exact laws and regulations vary by country. This mainly concerns taxation.

Read also the article "Bitcoin ETF - advantages and disadvantages".