Germany recognizes cryptocurrencies as 'asset'

The largest economy in the eurozone is also at the forefront of legal developments in the area of digital assets. The BaFin guidelines.Last week Bloomberg published a survey, which it conducts every year, about the most state has the most innovative economy. First in the ranking for last year was Germany.

A key factor in achieving innovation is the legislative framework. There are laws that protect it, encourage it, and prevent "bad players" from harming the system through fraudulent acts. It is therefore not surprising that Germany is also at the forefront of legal developments in the field of digital assets.

What exactly is going on there? In a press release issued on Monday, March 2, 2020, the German Federal Financial Supervisory Authority (BaFin) issued guidelines defining cryptocurrencies as financial instruments. It specifically states that this category includes any digital value representation that has not been issued or guaranteed by any central bank or public entity and is not necessarily linked to a currency defined by law. However, it is accepted as a means of exchange by natural or legal persons and may be transmitted, stored and transmitted electronically.

This rule not only clarifies, but also broadens the definition of digital financial instruments. Legal circles see it as part of the country's effort to adopt the EU's fifth anti-money laundering directive (AMLD5), which has been implemented this year.

Those operating in Germany without a license and wishing to obtain a cryptocurrency deposit will not be penalized as long as they apply by the end of November 2020. However, they must first show their intention before 30 March 2020. If an institution licensed by another EU country is not enough. It should also be approved by the competent German authorities.

This directive not only provides legal clarifications, but the banknotes can now be accepted by banks as collateral. But it is not clear what will apply to taxation. So far anyone who has been holding any cryptocurrencies for more than a year, any profits from the sale, are tax free.

Very positive developments in India

The next big news is about India. The country's Supreme Court has ruled unconstitutional the Central Bank's ban on cryptocurrency exchanges (which is the case in China). The ban has been in effect since April 2018 and has forced many businesses to close or relocate abroad.
It seems that the decision was expected. Many exchanges are ready to open their (electronic) doors, which will certainly contribute to additional liquidity in the market.

The news is even more positive than what we have said about Germany. India today has a population of 1.4 billion. These people live in a country where banking services are below average. The vast majority of people living in rural areas do not have access to banking. As if that were not enough, the government is trying to impose a curb on cash transactions. Given that millions of Indians work in tech companies, we understand that this is a huge country, mature enough to adopt cryptocurrencies.

It is the belief of the column that the great acceptance at the population level will come from these countries, because it solves practical trade problems. Not for the developed ones who want bitcoin and its company just for speculation or investment.

But developments in the issue of legalization of cryptocurrencies are also under way in Australia, where a court has ruled that cryptocurrencies can be used as a legal investment as a response, according to the Australian Associated Press. However, the judge took note of concerns about the volatility of their value, so he obliged the plaintiff to submit monthly reports on the value of his account in cryptocurrencies.