Digital assets are now acknowledged as financial instruments in Germany, and there are many discussions about integrating blockchain into the stock market to increase their liquidity and enhance legal compliance.[1]  The German government passed in December 2020 a new legislation to introduce all-electronic securities as part of the country’s broader blockchain strategy.[2]  According to the country’s finance ministry, “the new law relaxes rules forcing issuers and holders of securities to document transactions with a paper certificate.”[3]

Banks in Germany can sell and now store customers’ cryptocurrency in accordance with AMLD5 and AMLD6 requirements.[4]  Though, the new German tax regulations set a limit of €10,000 on losses from cryptocurrency derivatives transactions, residents will be able to reduce their income tax base by a maximum of this amount (commutators have suggested that this regulation amounts to a de facto a ban on trading in crypto derivatives).[5]Regulations have been also defined for providers of cryptocurrency ATMs – they need to obtain permission to install the devices in public places (there are currently 52 cryptocurrency ATMs in Germany).[6]

Germany offers a unique take on taxing digital currencies such as Bitcoin.[7]  Unlike most other states, Europe’s biggest economy regards Bitcoin as private money, as opposed to a currency, commodity, or stock.[8]  For German residents, any cryptocurrency held for over a year is tax-exempt, regardless of the amount.[9] If the assets are held for less than a year, capital gains tax doesn’t accrue on a sale, as long as the amount does not exceed 600 euros ($692).[10]  However, for businesses it’s a different matter; a startup incorporated in Germany still needs to pay corporate income taxes on cryptocurrency gains, just as it would with any other asset. But in 2021, a controversial new tax law came into force which effectively kills crypto derivatives trading in Germany, as losses can no longer be deducted.[11] The legislation reflects moves across Europe to regulate derivatives.[12]

[1] Fintechnews Singapore, How Financial Regulations Have Evolved in 2021,, (Feb. 24, 2021),

[2] Felipe Erazo, German Bank Donner & Reuschel to Offer Crypto Custody Services in Response to a ‘High Market Demand’ in the Country,, (Mar. 9, 2021),

[3] Id.

[4] Fintechnews Singapore, supra note 20.

[5] Id.

[6] Id.

[7] Adriana Hamacher, 10 Countries That Don’t Tax Bitcoin Gains (2021), Decrypt, (Jan. 11, 2021),

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Id.