Knowledgebase

Cryptocurrency Regulations in the EU

Cryptocurrencies: Legal, member-states may not introduce their own cryptocurrencies
Cryptocurrency exchanges: Regulations vary by member-state

The EU Parliament has passed no specific legislation regarding cryptocurrencies. While cryptocurrencies are broadly considered legal across the bloc, cryptocurrency exchange regulations depend on individual member states. Cryptocurrency taxation also varies, but many member-states do charge capital gains tax on cryptocurrency-derived profits – at rates of 0-50%. In 2015, the Court of Justice of the European Union ruled that exchanges of traditional currency for cryptocurrency should be exempt from VAT. 

Cryptocurrency regulations EU

Exchanges

Cryptocurrency exchanges are not currently regulated at a regional level. In certain member states, exchanges will have to register with their respective regulators such as Germany’s Financial Supervisory Authority (BaFin), France’s  Autorité des Marchés Financiers (AMF), or Italy’s Ministry of Finance. Authorizations and licenses granted by these regulators can then ‘passport’ exchanges, allowing them to operate under a single regime across the entire bloc. In April 2018, the EU agreed on the text for the Fifth Money Laundering Directive (5MLD) which will bring cryptocurrency-fiat currency exchanges under EU’s anti-money laundering legislation. 5MLD will require exchanges to perform KYC/CDD on customers and fulfill standard reporting requirements.

Future Regulation

The EU is actively exploring further cryptocurrency regulations. In February 2018, European Central Bank president, Mario Draghi, stated authorities were working with the Single Supervisory Mechanism to develop a way of identifying the financial risks that cryptocurrencies pose.

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