Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology
In 2021, the Andorran Parliament took concrete steps to address digital currency and related technology.[1] The Andorran Parliament in 2020 announced Horitzó 23. This legislative package seeks to address the ongoing consequences of the COVID-19 pandemic.[2] The plan includes 77 proposals divided into three pillars: welfare and social cohesion, the economy and innovation, and alliances for exchange.[3] Notably, Horitzó 23 emphasized the digital economic transformation by addressing the emergence of cryptocurrency and blockchain technology.[4]
To do so, one of the measures proposed a modification of Law 35/2014.[5] Passed on November 27, 2014, Law 35/2014 regulated a variety of electronic services that require trust, including electronic signatures and seals, certifications of authentication, and electronic delivery services and time stamps.[6] In essence, the Government sought to classify blockchain as an electronic trust service in Andorra. Legislators sought to modify the law through Horitzó 23 for two reasons. First, as Andorra begins the process an Association Agreement with the European Union, it is important that Andorra adapt the norm and regulatory framework of the European Union.[7] Second, the continued emergence of distributed registration technologies—like Blockchain—necessitates legal modification.[8]
Electronic Trust Law
The amendment to the Electronic Trust Law modified several provisions and added six new articles.[9] For example, Article 3 added pertinent definitions related to block-chain and Distributed Ledger Technologies (DLT) broadly.[10]Specifically, it defined a block as an “aggregate and immutable unit of data using distributed ledger technology, which consists of a collection of transactions, made in a specific period of time, with a block header, a hash of the previous block header, and a Merkle tree.”
Additionally, Article 5 outlined the legal effects of the electronic identification of a natural person.[11] Subsection (3) notes that electronic authentication involving a natural person will have the same effect as if the person used corresponding official documents.[12] Subsection (4) grants the Government regulatory authority to define levels of security for electronic identification and authentication and to establish standards relating to these levels of security.[13] Article 7 mirrors Article 5 but extends its application to the electronic identification of a legal person. In these cases, electronic authentication will have the same effect as if done by the representative of the legal person with respect to corresponding official documents.[14]
Ultimately, the amendment supports the issuance of local and international digital assets.[15] Further, this regulation is important in creating the stable regulatory framework necessary to attract investment and to create a stock market through blockchain in Andorra.[16]
The Andorran Government signed the modification on April 29, 2021, and the modification went into effect once it was printed in the Official Bulletin on May 19, 2021.[17] A direct result of the law is that cryptocurrency now have legal value and are both reliable and usable in Andorra.[18]
Beyond the modification of Law 35/2014, the Government discussed the creation of a license to be administered by the Andorran Financial Authority (AFA).[19] This license would allow entities to operate using crypto-assets.[20]
P.S. Insights on Cryptocurrency Legal Issues
Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear.
Under the Financial Crimes Enforcement Network (FinCEN), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States are relatively friendly to crypto mining.
However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining.
Our Freeman Law Cryptocurrency Law Resource page provides a summary of the legal status of cryptocurrency for each country across the globe with statutory or regulatory provisions governing cryptocurrency. The globe below provides links to country-by-country summaries:
Countries with National or Regional CryptocurrenciesGlobal Cryptocurrency RegulationsCountries with National or Regional Cryptocurrencies
Freeman Law can help with digital currencies, tax planning, and tax compliance. Contact us now at (214) 984-3410 to discuss your Andorran cryptocurrency and blockchain technology concerns.
