Sweden and Cryptocurrency

Sweden Cryptocurrency Laws
Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology

The legal framework for cryptocurrencies has conflicting laws and contradicting policies. While some government authorities have issued warnings about the risks associated with cryptocurrency, other Swedish authorities have officially recognized the benefits of the new technology. Sweden’s financial regulator, Finansinspektionen (FI), warned the public about the high risks and low consumer protections associated with cryptocurrency investments.

The FI elaborated that cryptocurrency investments are “unsuitable for most… consumers” because it is “difficult, if not impossible, to value on a credible basis.” Arguably, cryptocurrency is hard to value on a credible basis because it has no real intrinsic value since it is not backed by gold, silver, or a national government (like fiat currency). Since it has no intrinsic value, it may be hard to value on a credible basis.

Furthermore, government authorities have emphasized that Sweden’s consumer protection regulations fail to protect Swedish investors from the risks associated with investing in cryptocurrency. For example, the Swedish Financial Supervisory Authority (SFSA) warned that most ICOs are not regulated. In their warning, the SFSA defined an “ICO” as a “term used as the designation for launching a new token or [another form] of digital access based on… crypto.” Since ICOs are virtually unregulated, there is no guarantee that tokens offered in an ICO are legitimate and confer any rights to investors. In fact, there have been several ICO scams where investors received worthless tokens or vaporware.

One example of an ICO scam is a company named “Starflow.” In their offering, Starflow provided materially false white papers that appeared legitimate. Additionally, the majority of Starflow’s followers on social media were fake users. Fake users refer to fake accounts that can be bought to follow an account on Twitter to inflate the number of followers displayed on a particular profile. Furthermore, one of Starflow’s earliest advisors is a “notorious serial entrepreneur” named Johan Staël von Holstein.

Holstein represents the potentially nefarious characters that act as ICO advisors. Holstein’s notoriety stems from past accusations that he prioritizes personal enrichment over the advancement of cryptocurrency. Holstein earned his notoriety by investing in Icon Medialab during the dot.com boom in the 1990s. Following the tech bubble crash, the stock of Icon Medialab fell 98% in less than one year. Due to the enormous loss in value, over five hundred people lost their jobs. Despite the massive layoffs of his employees, Holstein boasted that his net worth was $100 million in 2000. Holstein’s boastful comments following the loss of over 500 livelihoods strengthen the argument that Holstein is primarily concerned about his wealth instead of his company investors.

The SFSA also warned that there is no guarantee that investors can subsequently sell their ICO tokens because there is no market available that facilitate cryptocurrency trading with full legal protections. Additionally, the SFSA warned that several ICO advertisements may be misleading. For these reasons, the SFSA believes that ICOs expose Swedish investors to a significant risk of losing their investments.

Nevertheless, the Swedish central bank, “Riksbank,” indicated that it recognizes the potential benefits of cryptocurrency. Specifically, Riksbank asked the Swedish parliament to invest 30 million Swedish Kronos (or approximately $3.1 million) per year for five years to make Sweden a digital currency innovation hub. If the Swedish government approves, then Sweden will invest $15,500,000 to finance and host cryptocurrency conventions over a timespan of five years. In doing so, Riksbank intends to join Switzerland, Singapore, and Hong Kong in hosting the BIS innovation hub for cryptocurrency. In addition, Riksbank also implemented a CBDC project to allow Swedish citizens to use an “e-krona” as a means of payment. These favorable cryptocurrency policies and initiatives directly contradict the warnings issued by the FI and the SFSA.

The overall hostile legal environment for cryptocurrency is also in direct contradiction with the fact that digital currency is widely accepted by the public of Sweden. First, Sweden is the world’s most cashless society. Following the pandemic, less than 10% of all payments use cash as a means of payment. Consequently, Sweden’s strict laws on cryptocurrency conflict with the fact that over 90% of payments are used with payment methods other than cash.

Second, Sweden’s laws on cryptocurrency conflict with the fact that Swedes can indirectly invest in Bitcoin through the state’s pension plan. “State Pension Fund AP7” is the default government alternative to private savings options on Sweden’s private pension market. Specifically, two companies in the AP7 fund invest in Bitcoin. Approximately five million Swedes indirectly in Bitcoin through the state pension fund. In total, the fund owns about 43 bitcoins. Since one bitcoin is worth $35,614.40 at the time of this writing, the state pension fund owned exactly $1,531,419.20 worth of Bitcoin. Despite warning the public of the risks associated with cryptocurrency, the Swedish government has taken no action to prevent state pension funds from holding positions in cryptocurrency.

For the above reasons, the Swedish legal environment for cryptocurrency is contradictory. Different government agencies within Sweden disagree as to whether the benefits of cryptocurrency outweigh the risks. Nevertheless, the public of Sweden has arguably adopted cryptocurrency as a valid innovation and a technology that has long-term value.


  1. Huillet, M. (2021, February 23). Swedish regulators warn consumers against crypto as markets tumble. Cointelegraph; Cointelegraph. https://cointelegraph.com/news/swedish-regulators-warn-consumers-against-crypto-as-markets-tumble
  2. Samuel Haig, Financial Regulators of New Zealand and Sweden Issued Statements Regarding ICOs. (2017, November 8). Bitcoin News. https://news.bitcoin.com/financial-regulators-new-zealand-sweden/
  3. The Law Reviews – The Virtual Currency Regulation Review. (2020). Thelawreviews.co.uk. https://thelawreviews.co.uk/title/the-virtual-currency-regulation-review/sweden
  4. Almar Latour. (2000, January 21). Sweden’s Staunch Leftists Shudder As Millionaire Rattles Status Quo. WSJ; The Wall Street Journal. https://www.wsj.com/articles/SB948409314881613093#:~:text=Mr.,million%20(98.8%20million%20euros).
  5. Olabode Anise, Anatomy of Twitter Bots: Fake Followers. (2018, October 23). Duo Security. https://duo.com/blog/anatomy-of-twitter-bots-fake-followers
  6. Lindeberg, R., & Ott U. (2020, December 11). Sweden Explores Moving to a Digital Currency. Bloomberg.com; Bloomberg. https://www.bloomberg.com/news/articles/2020-12-11/sweden-explores-the-feasibility-of-moving-to-a-digital-currency
  7. CoinDesk, https://www.coindesk.com/author/spencerbeggs. (2021, June 11). Bitcoin. CoinDesk. https://www.coindesk.com/price/bitcoin

SCEA Amendments & AML Regulations

On January 1, 2020, the Swedish Currency Exchange Act (SCEA) amendments became effective. Generally, the SCEA requires Swedish financial institutions to comply with anti-money laundering provisions. In addition, the new amendments expanded the scope of the SCEA to encompass custodian wallet providers and providers of virtual currency exchange services. Following the amendments, these institutions must follow Sweden’s anti-money laundering provisions or face legal liability. These provisions implement know-your-customer (KYC) regulations that require financial intermediaries to obtain customer information before facilitating transactions.

The SCEA amendments provide statutory definitions for custodian wallet providers and providers of virtual currency exchange services. The amendments define custodian wallet providers as “providers of services to safeguard private cryptographic keys on behalf of their customers, and to hold, store and transfer virtual currencies.” In contrast, providers of virtual currency exchange services are service providers who offer exchange services between virtual currencies and (1) Swedish or foreign fiat currency, (2) e-money (as defined in the Swedish E-money Act), or (3) other virtual currencies.

The amendments also define “virtual currency” as “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency, and does not possess a legal status of currency or money but is accepted by natural or legal persons as a means of exchange and that can be transferred, stored and traded electronically.” This definition is broad enough to include currency tokens and some investment tokens but is too narrow to cover utility tokens.

A currency token is a cryptocurrency that serves as a general means of payment and function in a similar manner to regular currencies. Prominent examples of currency tokens include Bitcoin and Ethereum. In contrast, an investment token is a cryptocurrency that serves as an investment, and generally give financial rights analogous to shares in a company.

In contrast, utility tokens function mainly either as: (1) a means of payment in a specific setting that no use as a general means of payment (e.g., paying for services or goods from a specific vendor); or (2) as a means of granting access to a service or product through ownership of such tokens. Utility tokens fall outside the statutory definition of virtual currency because virtual currencies are different from utility tokens, which are often in-game currencies that can be used exclusively within a specific game environment.

The SCEA amendments are stricter than what European AML regulations typically require. For instance, most AML regulations do not subject providers of exchange services between virtual currencies to anti-money laundering requirements. By subjecting these providers to SCEA regulations, Sweden intends to impose stricter requirements than the common EU standard.


  1. Rockborn, N. The Law Reviews – The Virtual Currency Regulation Review. (2020). Thelawreviews.co.uk. https://thelawreviews.co.uk/title/the-virtual-currency-regulation-review/sweden


In Sweden, there are no statutes that specifically address cryptocurrencies. Nevertheless, cryptocurrencies potentially fall under Sweden’s general legal framework. One possible regulation that virtual currencies fall under is the “Markets in Financial Instruments Directive II” (MiFID II). Generally, MiFID II regulates Europe’s financial markets and determines what financial instruments are legally permissible in the EU. Cryptocurrencies that are classified as “transferable securities” fall under MiFID II regulations. Nevertheless, cryptocurrencies are not subject to MiFID II unless they are transferable securities.

To classify as a transferable security, a virtual currency must satisfy two necessary elements under Swedish law: (1) they must be transferable, and (2) they must be negotiable on the capital market. Cryptocurrencies that do not satisfy these two requirements are not classified as transferable securities and are therefore not controlled by MiFID II regulations. In other words, cryptocurrencies may or may not be subject to MiFID II depending on its specific characteristics. Accordingly, cryptocurrency tokens must be analyzed on a case-by-case basis. To properly analyze cryptocurrencies on a case-by-case basis, a general understanding of the various types of cryptocurrencies is fundamental.

Generally, a cryptocurrency token may fall under one of three categories under Swedish law: (1) currency tokens, (2) utility tokens, and (3) investment tokens. Currency tokens are virtual currencies that function similarly to regular currencies because their primary purpose is to be used as a means of payment. Prominent examples of currency tokens include Bitcoin and Ethereum. Generally, currency tokens are not transferable securities because they do not provide token holders with any rights.

Even if a particular currency token does transfer rights to holders, it probably still falls outside of MiFID II regulations since transferable securities cannot be regarded as an instrument of payment under the statute’s definition. Therefore, Bitcoin, Ethereum, and other similar currency tokens likely are not controlled by MiFID II regulations in Europe.

In contrast, utility tokens are virtual currencies that primarily function as either: (1) a means of payment in a specific setting instead of a general means of payment (e.g., paying for services or goods from a specific vendor), or (2) a means of granting access to a service or product through ownership of such tokens. For example, a video game franchise named NBA 2K permits players to exchange U.S. dollars for 2K tokens. With these tokens, players can upgrade basketball players within the game. However, they cannot use these tokens outside of the game of 2K. Therefore, 2K tokens are probably an example of utility tokens.

Under MiFID II, utility tokens are not transferable securities because they function as a means of payment for specific products or services. Therefore, most utility tokens are generally governed by consumer protection law. However, utility tokens may be transferable securities and under MiFID II regulations if they are marketed with the expectation of being sold for a profit or if the tokens give rights to financial benefits. Nevertheless, the general presumption is that utility tokens are outside the scope of MiFID II regulations.

Investment tokens are virtual currencies that primarily function as an investment that provides holders with financial rights and sometimes voting rights. Accordingly, investment tokens are like typical stocks or shares in a company. Investment tokens are generally transferable securities if they are transferable and are negotiable on the capital market. Investment tokens that satisfy these requirements are transferable securities and are subject to MiFID II regulations. Generally, investment tokens are subject MiFID II on the presumption that most investment tokens are transferable and negotiable on the open market.

To summarize, virtual currencies classified as transferable securities generally fall under MiFID II if they are transferable and negotiable on the capital market. Generally, currency tokens and utility tokens are not transferable securities and are not required to follow MiFID II’s statutory requirements. In contrast, investment tokens are generally transferable securities and probably are required to follow MiFID II requirements. Since some virtual currencies fall under MiFID II while others do not, investors must evaluate whether their virtual currency is a currency token, a utility token, or an investment token on a case-by-case basis.


  1. The Law Reviews – The Virtual Currency Regulation Review. (2020). Thelawreviews.co.uk. https://thelawreviews.co.uk/title/the-virtual-currency-regulation-review/sweden
  2. MiFID II Definition. (2021). Investopedia. https://www.investopedia.com/terms/m/mifid-ii.asp


In Sweden, cryptocurrencies such as Bitcoin are considered taxable financial instruments. Therefore, Swedish citizens must report all cryptocurrency transactions to the Swedish Tax Agency (Skattevert). Skattevert classifies cryptocurrency transactions as “individual transactions involving assets.” Since cryptocurrency is an asset under Swedish law, it cannot properly be classified as currency or cash.

Since cryptocurrency is taxed in Sweden, it is imperative that Swedish residents declare Bitcoin and other cryptocurrencies on their tax reports to avoid civil liability. Crucially, cryptocurrency traders must record the price at which their token was bought and sold. Essentially, Swedish cryptocurrency holders must record all the details of their cryptocurrency transactions. In fact, the Swedish authorities advised residents to list all spending, trading, and lending done with cryptocurrency throughout the tax year. Consequently, it is burdensome for Swedish residents to properly report taxes associated with cryptocurrency transactions.

Profits and losses resulting from cryptocurrency trading are subject to capital gains taxes under Swedish law. Specifically, capital gains are subject to a flat tax rate of 30%. However, losses arising from cryptocurrency trading are deductible up to 70%. Furthermore, Swedish tax law differentiates between short-term cryptocurrency trading and holding cryptocurrency long-term like a stock. Realized profits from holding cryptocurrencies like stocks are considered income from business operations under Sweden’s tax law and are taxed at a rate of 20.6% to 22%. Therefore, cryptocurrency traders are incentivized to hold their assets for at least a year to avoid short-term capital gain taxes to pay lower taxes.

In contrast to Sweden’s flat capital gains tax, income taxes are based on a progressive model that varies according to income levels. Overall, Swedish taxpayers must pay two different income taxes: the National Income Tax and the Municipal Income Tax. There are two tax brackets in Sweden: (1) individuals that earn less than 523,200 Swedish Kroner a year, or less than $63,438.52 per year; and (2) individuals who earn more than 523,200 Swedish Kroner a year, or more than $63,438.52 per year. Individuals in the lower-income bracket pay a municipal income tax rate of 32% and a national income tax rate of 0%. In contrast, individuals in the higher income bracket pay a municipal income tax rate of 32% and a national income tax of 20%. Collectively, members of the higher income bracket pay a total income tax rate of 52%. This high percentage ranks Sweden as the highest tax-paying country worldwide.

To emphasize Sweden’s high tax rates, Swedish residents earning $70,000 annually must pay a 52% income tax rate, or $36,400 in taxes. Consequently, Swedish citizens that earn $70,000 per year earn a post-tax income of $33,600. In contrast, Swedish residents that earn $60,000 annually only pay a 32% income tax rate, or $19,200 in taxes. Accordingly, Swedish citizens that earn $60,000 earn a post-tax income of $40,800 per year. Therefore, citizens earning $60,000 annually take home $40,800 in post-tax income while Swedish citizens earning $70,000 annually take home $33,600 in post-tax income. In this scenario, members of the lower tax bracket take home $7,200 more than members of the higher-income tax bracket.

To disincentivize Swedish tax evaders, individuals that fail to properly file taxes from cryptocurrency transactions are subject to significant penalties and higher taxes. For example, a Swedish cryptocurrency investor named Linus Dunker was liable for a 300% tax bill on his cryptocurrency profits. Additionally, Dunker was liable for a fine equivalent to $1 million. Dunker was penalized because he had been trading cryptocurrency since 2014 without reporting his cryptocurrency transactions to Swedish authorities. Dunker’s story demonstrates the high penalties cryptocurrency traders may face if they fail to properly record their cryptocurrency transactions on their annual tax reports. Therefore, it is imperative that cryptocurrency traders are diligent in reporting their cryptocurrency transactions to the Swedish tax authorities to avoid civil liability.

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:


The Freeman Law Project – Cryptocurrency Regulation and Taxation: A Brief Primer

Is cryptocurrency legal in Sweden?

Do you have questions about cryptocurrency, digital currencies, or blockchain technology?
Freeman Law can help with digital currencies, tax planning, and tax compliance. Contact us now to schedule a consultation or call (214) 984-3410 to discuss your cryptocurrency and blockchain technology concerns.


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