Slowly, but positively.
Germany is one of the EU’s biggest economies. With that, Bitcoin and crypto have yet to gain popular acceptance throughout the country.
2021 seems to be the beginning though. Interest has been slowly on the rise, both from investors and regulators.
So below, we’ll look at the development of crypto in Germany throughout 2021. And to get started…
Blockchain Is Affecting Germany’s Finance World
Based on a December survey from Bitkom, most German companies (59%) see blockchain as a vital future tech that’s quite underutilized.
This indicates that interest is on the rise. And as of now, the majority of 2000+ employee companies in Germany’s financial sector are exploring the use of blockchain.
Many German institutions are now developing platforms and products for digital currency use. Even state-connected institutions are joining the fray.
In fact, law reform in Germany is now calling for blockchain integration.
June 2021 saw the Electronic Securities Act. This established the classification of digital securities while abolishing previously legal and mandatory securities documentation.
Also, December 2021 saw the introduction of Germany’s first e-security – used as bearer bonds by Dekabank.
Another milestone is the Fund Location Act. Passed July 2021, it allows certain funds (like insurers and pensions) to allocate 20% of their investment volumes into crypto.
The Stuttgart Stock Exchange launched Bison a few months ago – which is its crypto trading application.
The app now enjoys a large level of success. From early 2021, the number of Bison users has doubled, reaching 550,000. Trading volume has also recorded new highs, reaching EUR 5.6 billion.
Foreign crypto exchanges are now allowed access in Germany.
Coinbase is a notable example, having become an officially regulated platform this August in Germany. Bitpanda (an Austrian exchange) also launched in 2021 and is seeing success.
German banks are also expanding into crypto. Hauk & Aufhauser is expanding its services towards digital assets. Also, saving banks are planning to give investing and trading clients more access to digital currencies through their accounts.
Second – Stricter Regulations
Increased blockchain adoption in Germany doesn’t come without a cost. Stricter regulations are one.
The past year saw German lawmakers regulate the market in a way that addresses the volatility and risk of crypto.
For example, July 2021 saw Germany’s Ministry of Finance release a regulatory document with great impacts on the industry.
The document modifies tax exemptions for crypto investments that were held for a year minimum. If a token is used for non-capital gains returns, the exemption will only apply to tokens held for 10 years minimum.
This is bound to make Germany a much more attractive residency spot than before. But at the same time, it regulates crypto into a safe investment vehicle.
Overseas investors can now use tokens for tax benefits, with no capital gains taxes due on investments held for over a year. Yet, they cannot buy them for fast-trading purposes. They’ll need to buy and hold the tokens for an extended time period.
Crypto anonymity is another regulatory topic in Germany. It’s expected that trading platforms (like crypto exchanges), will now be required to collect info from recipients and senders – including name, account data, addresses, etc.
Third – Digitizing the Euro
2021 saw the European Central Bank start a 2-year trial to test the possibility of introducing the digital euro. Germany has had a prominent role in those tests.
Germany’s central bank and multiple financial institutions have even brought up the topic of central bank digital currencies.
Digital bond markets have also been tested by the central bank, the German Federal Finances Agency, and the Deutsche Borse. The trial proved that it is possible to connect traditional transaction systems with blockchain transactions.