Crypto regulation in different countries

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Germany

Germany has adopted a relatively favorable approach to crypto-currencies. In 2020, the German government passed a law allowing German banks to store and trade cryptocurrencies, recognizing the legal status of crypto-assets. Cryptocurrencies are considered financial instruments and are regulated by the country’s financial supervisory authorities.

Tax level: In Germany, capital gains realized with cryptocurrencies are generally taxed after a holding period of at least one year, allowing for a partial tax exemption. Gains realized before this period may be subject to income tax.

France

France has also taken steps to regulate the cryptocurrency sector. In 2019, an ordinance was passed in France to create a legal framework for ICOs (Initial Coin Offerings) and digital tokens. Providers of cryptocurrency-related services, such as exchange platforms, are subject to strict regulation and must obtain a license from the Autorité des marchés financiers (AMF).

Tax level: In France, capital gains linked to cryptocurrencies are taxed as income tax. Taxation depends on how long the assets are held, with a distinction between short-term and long-term gains. Losses can also be deducted from gains.

Luxembourg

Luxembourg has taken a pragmatic approach to cryptocurrencies and blockchain technology. The country has sought to become a financial hub for blockchain and cryptocurrency-related businesses. It offers a favorable regulatory environment for companies working in financial technology, while ensuring investor security.

Tax level: In Luxembourg, taxation of cryptocurrencies is generally aligned with the tax principles applicable to other types of financial assets. Capital gains may be taxed depending on the holding period and the tax status of the individual or company.

Japan

Japan was one of the first countries to formally regulate cryptocurrencies. In 2017, the Japanese government officially recognized Bitcoin as a legal payment method. Cryptocurrency exchanges in Japan are subject to oversight by the Financial Services Authority (FSA). The regulations aim to promote the responsible development of blockchain technologies while ensuring consumer protection.

Tax level: In Japan, capital gains from cryptocurrency transactions may be subject to income tax. Japan has a specific tax regime for cryptocurrencies, with varying tax rates depending on the amount of gains.

Salvador

El Salvador became the first country to adopt Bitcoin as legal tender in September 2021. The Salvadoran government implemented the Bitcoin Law, allowing citizens to pay their taxes in Bitcoin and obliging merchants to accept the cryptocurrency as a means of payment. However, this decision has been subject to controversy and mixed reactions nationally and internationally.

Tax level: In El Salvador, following the adoption of Bitcoin as a legal currency, capital gains on Bitcoin transactions are not subject to income tax, in accordance with the country’s Bitcoin law.

United States

The United States has a complex approach to cryptocurrency regulation. Regulations vary at federal and state level. The Securities and Exchange Commission (SEC) regulates token offerings and securities-related activities, while the Financial Crimes Enforcement Network (FinCEN) oversees aspects related to money laundering and KYC (Know Your Customer) compliance. The regulatory framework in the United States is constantly evolving, and there are ongoing discussions to clarify and strengthen regulations in this area.

Tax level: In the United States, capital gains related to cryptocurrencies are generally taxed. Tax regulations vary depending on the nature of the transactions, whether they are cryptocurrency sales, exchanges or mining. Tax regulations in the US can be complex, and it is recommended to consult a tax professional for specific advice.

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