The whole crypto world was waiting for this information! The German regulator BaFin has issued the latest guidelines explaining the status of cryptocurrencies in Germany. The guidelines show that both Bitcoin and other cryptoassets (other altcoins) are now officially recognised by Germany as financial instruments. Moreover, all platforms enabling cryptocurrencies trading will from now on have to be licensed by this regulator in order to continue to operate legally in Germany.
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What does this mean for the German crypto industry?
Definitely, Germany is one of the countries which, for the others, is an indicator of what legal and tax regulations are worth applying to new assets appearing on the market, so it can be assumed that soon similar regulations will appear in other EU countries.
For Germany itself, the announcement of a cryptocurrencies in financial instruments will mean a certain revolution, which will not necessarily appeal to crypto lovers, but unfortunately they will have to adapt to these guidelines. The majority of those who make use of the possibility of earning money from cryptocurrencies still assume that they are anonymous and that no taxes have to be paid on the profits made. This is an obvious mistake: governments make it clear that everything we earn is accountable, whether it’s currency, cryptocurrency, classic, innovative work or selling water in jars. If you make a profit, you have to pay tax for it.
The imposition of the obligation to obtain a regulator’s license on German cantors and exchanges trading in cryptocurrencies clearly shows that soon these places will be under the strict control of officials, and investors operating on them will not be able to pretend that they did not know that the tax must be paid for profits.
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What are cryptocurrencies for the German regulator?
In yesterday’s announcement, the BaFin clearly describes what cryptocurrencies are. It is a digital representation of monetary value, but since it was not issued by any bank, it is also not covered by the guarantees of the central bank and has the status of neither money nor currency in itself. It is only accepted as a kind of intermediary/means of exchange by companies or individuals, and can be stored and sold electronically.
BaFin clearly emphasises that recognising a cryptocurrencies as a financial instrument does not in any way increase the security of investing in this market. Investors will not be covered by any protection or guarantee, and must be fully aware of the risks involved in losing even all the capital they have committed to crypto trading.
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Where are the next crypto regulations?
Following Germany’s example, will other EU countries introduce similar regulations in their territories? It is difficult to say. Although the regulation of this market is slow, in recent years there have been many more regulations in the world, which make it easier for investors to settle their taxes and trade in cryptocurrenciesmore freely. This is not yet an ideal situation, but it can be assumed that the improvement of crypto regulations will have a positive impact on this industry and allow it to emerge from a “niche” into wider waters.