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The German cryptocurrency market has been marked as dynamic because of proactive steps taken by the government, regulatory evolution, along with major investments. This article captures some of the key developments, the regulatory landscape, major investments, and players that are preparing ground to shape the future of cryptocurrency in Germany.
There have been major developments for all the cryptocurrency markets in Germany on the back of proactive government initiatives and investments. The big development came in November 2023 when the German government planned for an early probe into procedures to see if the legal conditions in which Bitcoin would actually be made an official legitimate legal tender have developed.
This was done to provide companies and citizens with legal security and to take away potential hazards like money laundering and tax evasion through cryptocurrencies without killing the innovation factor and the elements of freedom within cryptocurrency.
It was in this line that, in April 2023, the German government introduced the Future Financing Act, which governs how crypto assets are to be held and plans for insolvency protection. In March 2023, the country's central bank, the Bundesbank, welcomed the symposium for a government-led initiative in driving financial education. The collective effort will contribute to citizens' ability to make well-informed decisions and to navigate the waters of the financial world successfully.
Germany has accepted digital tokens as financial instruments, paving the way for discussions on how blockchain technology can be deployed in the securities market space to boost liquidity and enforce legal compliance. Even the government of Germany, last year, passed a regulation that incorporates all-electronic securities into a broader blockchain strategy. The law allegedly releases restrictions that oblige the issuers and holders of a security to document transactions via paper certificates, according to the nation's finance ministry.
It is thus left to the country's banks to be entrusted and permitted to operate cryptocurrency sales and safekeeping to consumers while meeting the requirements derived from AMLD5 and 6. The most recent tax laws involved a limiting clause on losses that would be made in cryptocurrency derivatives trading, with these losses pegged at €10,000, which the residents could only have deducted from their reportable income.
This has seen many speculators believe that losses from crypto trading have been barred. This is in addition to the issuance of further detailed regulations regarding operators of cryptocurrency ATMs that they must obtain official approval before providing such ATMs in public locations. At the moment, there are 52 cryptocurrency ATMs functioning in Germany.
In Germany, the major regulatory bodies actively seeking cryptocurrency solutions include the German Federal Financial Supervisory Authority and German Federal Central Tax. The key associations supervising and enforcing compliance with laws, regulations, and implementation standards in the cryptocurrency market in Germany are the German Blockchain Association and the Association of German Banks.
Major investments in the cryptocurrency market in Germany include the mergers and acquisitions, partnerships, funding, product launches, and service launches. For example, a partnership eventually occurred in January 2024 between eToro Global Trading and Tangany, a Munich-based fintech that serves as a crypto custody solution, to improve the service for holders of cryptocurrency on the eToro platform. This would likely represent another effort for the provision of secure and transparent custody for eToro users in Germany, this time for crypto assets.
In December 2022, Bitcoin Group SE finalized the purchase of Bankhaus von der Heydt in a transaction with Dietrich von Boetticher to procure all the shares in the bank. The company is paying €14 million in money and 150,000 of its own shares for the purchase in a capital increase. The purchase price can be reduced depending on the development of Bankhaus von der Heydt's equity.
Some of them are Centrifuge (CFG), IOTA, Aragon, Bigchain DB, Tangany, MXC, GeBlock, Blockpit GmbH, The Jing Stock, Lota, Bitwala, Slock.it, Rotki, Innoplexus, Ascribe, PEY, Metaco, SolarChange, CoinTracking, Leverton, BitxATM Technology, Catena Capital, Coin Analyst, and Maticz Technologies.
The cryptocurrency market in Germany market is expected to reach US$123 million in 2028 from US$67 million in 2023, at a CAGR of 13.87%. As Germany remains considerably positive with the implementation of blockchain technology and cryptocurrency, this market is projected to register higher levels of liquidity, legality, and a more widespread acceptance both by the business world and consumers.
