Cryptocurrency Concerns
vs Regulations in Europe

The European cryptocurrency market is a constantly evolving space, with increasing investor demand, cautious but forward-looking governments and a diverse palette of regulations and concerns country by country. Here is the current intelligence of the European crypto market, from early birds through pioneers to mining havens.

Let’s look at some data. 4 percent of European internet users own cryptocurrency, across 17 markets, according to the 2019 report by GlobalWebIndex. Switzerland has the highest rate of crypto ownership in Europe (among the highest in the world) and London has the highest concentration of crypto holders. The European markets with the most cryptocurrency holders also tend to have wealthier, younger online populations.

But understanding crypto holders is only one part of the puzzle — the related governmental regulations and concerns continuously form the opportunities and limitations of the market, balancing between a future-driven attitude and a cautious approach designed to protect investors.

Here we take a snapshot of the European crypto market, focusing on the countries that are the most active in the space, starting with the broader regional context.

Macro view on the cryptocurrency market of Europe

To date, the European regulatory environment for digital assets has largely been driven by individual countries, which have made their own rules, decided on their own classifications and often gone in different directions. However, the European Union (EU) has slowly but surely begun to show an increased interest in harmonising the European regulation of digital assets.

The 5th Anti-Money Laundering and Counter Terrorist Financing Directive, known as “5AMLD”, came into effect 10 January 2020, a legislation adopted by the EU to contribute to global security, the integrity of the financial system and sustainable growth — and, as was anticipated, widened the regulatory perimeter to capture crypto, and entities dealing with crypto, through new definitions of “virtual currency” and “virtual asset service providers” (or VASPs).

Under 5AMLD, cryptocurrency businesses are now considered to be “obliged entities”, the same as traditional financial institutions. Therefore, crypto companies are required to adhere to the same AML/CFT (Anti-Money Laundering/ Combating the Financing of Terrorism), KYC (know-your-customer) and data-sharing requirements as banks, for instance.

Crypto providers (crypto exchanges and crypto wallet services) now have to register their businesses with local authorities in the EU, implement transparent KYC, Customer Due Diligence (CDD) and Suspicious Activity Reporting (SAR), and must be able to provide identifiable user information (name, address, etc.) to Financial Intelligence Units (FIUs) if requested.

Some countries even implemented 5AMLD into their local laws prior to the 10 January 2020 date. An example is Finland where the country’s new regulations went into full effect in November 2019. A local crypto company, LocalBitcoins, had made the necessary changes even prior to that, in March 2019, thus becoming the first digital asset exchange in Europe to align its business to 5AMLD. The company introduced a new sign up and verification process for its users, including both individual and corporate traders.

UK-based Bottle Pay provides a contrasting example. The crypto wallet provider, after a success story evolving throughout only a couple of months, including raising $2 million in seed funding, shut down its services in December 2019, before 5AMLD came into effect. Bottle Pay said that “the amount and type of extra personal information” they would have been required to collect from their users would have altered the user experience they provided and were not willing to force any new process onto their community. Meanwhile, as the UK was still a member of the EU at that time, it implemented 5AMLD into UK law and the Financial Conduct Authority (FCA) announced it would become the supervisor of UK crypto asset businesses.

In the midst of and perhaps despite forming new regulations, GlobalWebIndex found that cryptocurrency holders generally appreciate anonymity. Six in ten delete cookies or use private browsing windows and they are over twice as likely as the average to be using VPNs each month, in order to hide their web browsing from government surveillance — one in two does this which is about three times higher than among the general public.

Furthermore, in September 2020, the European Commission’s proposed Markets in Crypto-assets (MiCA) is set to open a new era for crypto legislation. It aims to create and harmonise a comprehensive regulatory framework for digital assets and their service providers across the EU. This includes any activities related to crypto assets, from issuance to provision, applying to both individuals and businesses involved. The planned regulations deal with rules of trading, marketing and supervision of digital assets, the governance of token issuers and crypto service providers, and last but not least, implementing consumer protection rules to ensure market integrity.

Once finalised and adopted across the EU, MiCA will introduce standardised definitions for elements of the digital assets market that were previously missing and have hindered policy making by individual countries — including classifications for crypto assets, types of tokens (asset-referenced, significant asset-referenced, electronic money, utility) as well as definitions of crypto asset services and service providers.

MiCA also includes the layout for a regulatory system for “stablecoins” as well, such as the Diem (formerly Libra) initiative of Facebook, highlighting the EU’s need for a rapid adaptation of technological progress in finance. The European Commission’s current plan, laid down in MiCA, is for the European Banking Authority to take on the supervisor role of stablecoin issuers.

MiCA, its accompanying annex and the also relevant proposal for “on a pilot regime for market infrastructures based on distributed ledger technology” (DLTR), all published at the same time, will be transferred to the European Parliament and the Council of Ministers for review and adoption. For proposals of this complexity, a minimum of a year can pass until they take their final form.

Over time, these EU initiatives will ultimately replace individual country regulations, which in turn, should provide operators in the digital asset space with greater certainty across a much larger market.

Until then, at the moment, the concerns and regulations around cryptocurrencies form a colourful landscape in Europe, country by country. Below we take a closer look at some of them, to give a comprehensive picture of each crypto market and a better understanding of how crypto is shaping Europe.


Germany: The early bird

Germany is considered to be a pioneer in the cryptocurrency market. Based on 2019 data, 87 percent of the adult internet population in the country know about cryptocurrencies, 18 percent own them and 9.2 percent used to own some already in the past.

The country’s crypto adoption rate can be considered fast compared to the average – one of the latest events was Boerse Stuttgart, Germany’s second largest stock exchange opening up its cryptocurrency trading platform (BSDEX) to all interested traders. Now the access to crypto is fairly easy in the country: users must be at least 18 years old, a resident of Germany, a European Economic Area (EEA) national and have a German bank account.

Potential investors can look into several other options in the market with being the most popular and the largest Bitcoin marketplace in Europe, with over 875,000 customers. Germany also has a total of 50 bitcoin ATMs, spread around mostly in Munich, Berlin and Düsseldorf.

  • As early as 2011, German regulator, BaFin (Federal Financial Supervisory Authority), expressed that bitcoin and related assets are "units of account" akin to artificial currencies, stating that bitcoin is not a legal currency but can be used for payments
  • Exchanging crypto into fiat (government-issued currency) and vice versa, the use of cryptocurrencies for payment and mining crypto are considered tax-free activities in Germany since February 2018
  • In 2019, Germany implemented 5AMLD expansively by defining crypto assets in its Banking Act, with crypto assets appearing in the definition of financial instruments (e-money and certain monetary values expressly excluded), introducing a new service called “crypto safekeeping” or “Crypto Custody Business” (the custody, administration and safeguarding of crypto assets), and allowing banks to sell and hold cryptocurrencies for their clients – these new rules became effective on 1 January 2020
  • Germany has been concerned from the appearance of crypto since the beginning, publishing more than one public warning but mostly emphasizing that crypto per se is not the problem, more so certain business activities related which may raise consumer protection and legal concerns
  • BaFin also criticized the use of the term ICOs (Initial Coin Offering) in a security context, as while IPOs (Initial Public Offering) are highly regulated and transparent, this is not often the case for ICOs, therefore BaFin regularly advises investors to have a full understanding of the related risks and potential rewards before making any investments in tokens, pressing the issues of transparency
  • 18%
    of online adult population owns cryptocurrency

  • 50
    bitcoin ATMs in the country

  • Not a legal currency but can be used for payments
    definition of crypto

  • Tax-free
    exchanging crypto into fiat currency
    using crypto for payment
    mining crypto

  • Banks are allowed to sell and hold crypto for their clients

GlobalWebIndex,, Global Compliance News, Global Legal Insights


UK: The cautiously proceeding

The UK left the EU on 31 December 2020 having agreed a last minute Trade and Cooperation Agreement with the EU. This meant that the UK left the EU with a deal, however the deal did not contain much detail on financial services. As the new year commences, we expect to learn more from the HM Treasury consultation on how the UK plans to treat crypto; as well as more detail on the on-going financial relationship between the UK and the EU.

According to FCA findings, 3.86 percent of the UK population currently owns cryptocurrencies which amount to approximately 1.8 million adults, and 75 percent of UK consumers, who own cryptocurrencies, hold under £1,000. 77 percent bought crypto assets through exchanges and out of those, 83 percent use only non-UK-based exchanges. This is in accordance with the fact that none of the UK-based ones have the user base like other popular rivals such as the US-based CoinBase or Kraken. UK residents also have access to 247 ATMs in the country, with 175 reported across London.

  • Cryptocurrencies in the UK are not considered money or equivalent to fiat currency and there is no central bank digital currency issued yet
  • As part of the UK government’s broader fintech strategy, the Cryptoassets Taskforce was created in March 2018, with members from the FCA, Her Majesty’s Treasury and the Bank of England to explore the impact of crypto assets and distributed ledger technology (DLT) in financial services
  • According to the Taskforce, a crypto asset is a “cryptographically secured digital representation of value or contractual rights that uses some type of DLT and can be transferred, stored or traded electronically”, and the Taskforce identified its three categories as exchange, security and utility tokens
  • In July 2019 the FCA released a Guidance on Cryptoassets, a Policy Statement that considered three broad categories of crypto assets, being security tokens, e-money and unregulated tokens (comprised of exchange tokens and utility tokens)
  • On 10 January 2020, the UK implemented 5AMLD and the FCA became the supervisor of crypto businesses
  • The FCA has recently decided to ban the sale, marketing and distribution of certain crypto-based products for retail investors, coming into effect 6 January 2021, despite 97 percent of respondents disagreeing with the proposal
  • The UK Treasury is currently considering feedback received from a consultation to bring certain crypto assets into the scope of the UK’s financial promotions regulations. The results of this Consultation are expected to be published in the first half of 2021
  • The Taskforce claimed several benefits to crypto assets when they are used as a means of exchange, for investment or as a capital raising tool, but it has identified the following risks associated as well:
    • risk of financial crime (possible use of crypto assets for illicit activities or cyber threats)
    • risk to consumers who might be unfamiliar with such assets and can be exposed to fraudulent activity or failings of service providers, or perhaps can struggle to access related market services
    • risk to market integrity which can lead to consumer losses or damage confidence in the market
    • potential implications for financial stability
  • The Bank of England separately expressed a somewhat stronger opinion and concluded that crypto assets “do not currently pose a risk to monetary or financial stability in the UK” but “anyone buying crypto assets should be prepared to lose all their money"
  • 3.86% of the population, 1.8 million adults
    own crypto

  • 247
    bitcoin ATMs in the country

  • Not considered money or equivalent to fiat currency
    definition of crypto

  • Taxable
    taxes apply for both individuals and businesses

  • ‹ £1,000
    the amount of crypto 75 percent of UK crypto owners hold

GlobalWebIndex,, Global Legal Insights,, Financial Conduct Authority


Switzerland: The home of Crypto Valley

14 percent of asset holders in Switzerland also hold crypto which makes Switzerland the joint highest country for crypto adaptation, alongside Romania and Ireland in GlobalWebIndex’s report.

Another survey recently conducted by the Swiss institute Intervista in 2020, revealed that 7 percent of savers, between 18 and 55, own cryptocurrencies. 13 percent of the youngest respondents, between 18 and 29 years old, also said that bitcoins and other digital currencies will become even more important in the future, and even 7 percent of those between 30 and 55 plans to continue investing in crypto.

There are some Switzerland-based exchanges interested parties can turn to with their investments, such as Lykke or SIX Swiss Exchange — the latter is considered to be the country’s principal stock exchange which now has 12 cryptocurrency ETP listed. There’s also Swissquote Group, Switzerland’s leading provider of online financial and trading services which partnered with Luxembourg-based exchange Bitstamp in 2017, and became the first online banking group in Europe to bring direct bitcoin investing to the market.

In addition, Switzerland has the sixth most bitcoin ATMs in the world, a total of 102 currently, mostly found in Zurich, Genève and Lausanne.

  • The Swiss law doesn’t define the term “cryptocurrency” or “virtual currency”, but cryptocurrencies are definitely not considered as legal tender and consequently, “money”
  • As for crypto taxation in Switzerland, for individuals, cryptocurrencies are seen as assets and subject to wealth tax, while capital gains on these assets are exempt from income tax; and legal entities must count with capital, corporate income tax and general VAT, but there can be overall differences between the cantons in the country
  • The Swiss Financial Market Supervisory Authority (Eidgenössische Finanzmarktaufsicht, FINMA) published guidelines on the regulatory treatment of ICOs in 2018 but there’s still no ICO-specific regulation to follow in the country
  • The canton of Zug in Switzerland (also known as the Crypto Valley) started accepting Bitcoin and Ether as payment for administrative costs in 2017, while Chiasso, in the canton of Ticino, started accepting bitcoin as tax payments in 2018 (with Zug set to follow in 2021), and the Commercial Register now also accepts cryptocurrencies for forming a company
  • In August 2019, FINMA published guidance on combating money laundering on the blockchain
  • In 2018, the Swiss Federal Council published a report on the legal framework for DLT and blockchain in Switzerland which then led to the creation of DLT-Draft Law in 2019, later approved by the Swiss Parliament in September 2020, and expected to come into force in 2021
  • The Swiss Federal Council cautions against risks in the areas of money laundering, terrorist financing, and investor protection, as one of its latest action taken was the agreement to further improve framework conditions for DLT and blockchain to increase legal certainty and reduce the risk of abuse, among others
  • FINMA closed down the unauthorized providers of the fake cryptocurrency “E-Coin” back in 2017, also issuing another general warning about the dangers of fake cryptocurrencies, including suspicious activities and unauthorized business models
  • As for consumer concerns, even many of the young Swiss are afraid of the risks of alternative investments in the form of crypto but this mostly originates from the lack of knowledge which they plan to act about
  • 14% of asset holders
    owns crypto

  • 102
    bitcoin ATMs in the country

  • Not legal tender or money
    definition of crypto

  • Taxable
    taxes apply for individuals and legal entities but vary between cantons

  • The canton of Zug = Crypto Valley
    accepts Bitcoin and Ether as payment for administrative costs

  • Bitcoin as tax payments
    accepted by the city of Chiasso

  • Cryptocurrencies for forming a company
    accepted by the Commercial Register accepts

  • One of the highest country for crypto adaptation in Europe

GlobalWebIndex,, Global Legal Insights, Library of Congress


Sweden: The progressive contestant

Deloitte’s 2019 report on the rise of cashless societies in the Nordics predicted that only 5 years from now one of the Nordic countries will be cashless. In Sweden alone, the value of cash in circulation has gone from SEK 77 billion in 2015 to SEK 57 billion in 2017.

As Sweden runs for the trendsetting title of Europe’s (or the world’s) first cashless society, the country is definitely not in the lead when it comes to crypto ownership as only 6 percent of asset holders are reported to own crypto. Nevertheless, Sweden is where the world’s first crypto ETP (exchange-traded product) was listed on Nasdaq Nordic in 2015. The Swedish government is currently undertaking a review (expected to be completed by November 2022) and it’s central bank, the Riksbank, is running a pilot project for the introduction of the E-krona.

The Swedish have access to the majority of crypto exchanges known in the market such as CoinBase or BitPanda, and a local Bitcoin exchange called Safello is also present since 2013, which built the country’s first bitcoin ATM in Stockholm as well, now totalling up to 12 (CoinShares, 2020).

  • Cryptocurrencies are not seen as currencies in Sweden but as means of payments, trade (thus being a financial service and a subject to mandatory reporting requirements) and capital investment
  • The sale of cryptocurrencies is exempt from value-added-tax but the purchase of virtual currencies as an investment is subject to capital gains tax (where profits are taxable and losses are deductible)
  • Crypto mining is also legally classified as a hobby in Sweden, therefore there’s no tax over such activity
  • The Swedish government is actively involved in the crypto space as the Swedish Enforcement Authority hosted its second online crypto auction in 2019, offering bitcoins to the public in a safe, legal way, not questionable by authorities
  • Sweden’s central bank, Riksbank, has characterized Facebook’s Libra project as “an incredibly important catalytic event”, putting pressure on the world’s central banks to ready themselves for digital transformation — the bank’s E-krona report noted that the discussion around this new role of central banks has only just begun, and that Sweden’s E-krona project will be at the centre of upcoming debates in the country and internationally
  • Sweden’s main concerns around crypto revolve around the case of the now nearly-cashless payments system versus the digitalisation of the system and the growing presence of crypto, and how the Swedish society would actually accept any significant steps towards changing the system
  • Stefan Ingves, the Governor of Riksbank stated that E-krona is still "around three to four years in the future” and would not entirely replace physical cash as that could create a crisis in certain scenarios, like loss of electricity
  • Riksbank’s 2019 paper on E-krona also identified the risk of certain groups in society finding it more difficult to make payments as they struggle to deal with digital technology
  • 6% of asset holders
    owns crypto

  • 12
    bitcoin ATMs in the country

  • Not currency but means of payment, trade and capital investment
    definition of crypto

  • Taxable and tax-free
    sale and mining of crypto: VAT-free, purchase as an investment: taxable

  • The world’s first crypto ETP
    listed on Nasdaq Nordic

  • National cryptocurrency, E-krona under testing

  • Crypto mining legally classified as a hobby

GlobalWebIndex,, Library of Congress, CoinShares, Sveriges Riksbank, Cointelegraph


Italy: The uncertain optimist

According to the joint study of GlobalWebIndex and BitPanda, only 5 percent of asset holders own crypto in Italy, and the 2018 data by Statista found similar results with 92 percent of respondents saying they do not own cryptocurrency. However, figures published in December 2019 indicated a growth in the number of stores and companies accepting bitcoin: over 350 businesses in the retail or food sector supported crypto payments as of November 2019, and a total of 270 retailers and 214 service providers throughout the country.

In September 2019, Italy’s bitcoin ATMs accounted for 0.8 percent of all the bitcoins ATMs globally, a total of 61, with a higher number located in Milan and Bologna. The first bitcoin ATM operator in the country was Chainblock which started in 2013, and has since expanded its portfolio operating a crypto exchange, as well.

While Italy is one of the most optimistic countries confident in the future of cryptocurrencies, and where buying crypto became much more accessible through the country’s mobile bank, Hype starting from March 2020, four out of five transactions are still cash-based in the country, leaving significant room for development — especially without the needed regulations and policies in place as a foundation.

  • There is a lack of legal framework and regulations for crypto in Italy, which means Italian citizens are free to own, buy, sell or use cryptocurrencies as a means of payment
  • The Italian central bank, Banca d’Italia issued their first warning about virtual currencies in 2015, defining them as “digital representations of a value… created by private subjects who operate on the Web”, and a similar wording is from a 2017 Decree saying that these are “a digital representation of value, not issued by a central bank or a public authority, not necessarily related to a fiat currency, used as a tool of exchange for purchasing goods or services, and electronically transferred, stored and traded”
  • A Ministerial Resolution issued by the Revenue Agency in Italy (Agenzia delle Entrate) implemented that value-added-tax does not apply to a transaction in which “cybercurrencies” are exchanged for traditional currencies or vice versa, but profit and losses on these transactions should be taxed
  • The Italian Government created an advisory group about blockchain in 2018, and a 2019 law defined the terms “blockchain” and “smart contract”, giving them a legal force
  • The Ministry of Economic Development published a consultation in June 2020 in relation to a national strategy for blockchain, including specific recommendations in relation to Italian AML, crypto assets definitions and a Central Bank Digital Currency
  • Banca d’Italia’s 2015 warning raised attention to the lack of tax regulations regarding cryptocurrencies, highlighting the specific nature of these digital currencies
  • Italy is missing its own fundamental definitions in crypto, starting with the phrase “cryptocurrency” right to the lack of ICO and STO (Security Token Offering) definitions, together with terms such as utility and security token which makes it clearly hard to move forwards with any related policies
  • Former Minister of Economy and Finance Giulio Tremonti recently summarised the crypto situation of Italy as an “area of great uncertainty"
  • 5% of asset holders
    owns crypto

  • 61
    bitcoin ATMs in the country

  • Digital representation of value, a tool of exchange
    definition of crypto

  • Taxable and tax-free
    exchange with traditional currency: VAT-free but profit and losses taxable

  • ~ 500
    retailers & service providers accept crypto payments

GlobalWebIndex,, Banca d’Italia, Cointelegraph, Library of Congress,


Austria: The fearful counselor

The report of GlobalWebIndex found that 12 percent of asset holders in Austria also hold crypto, second only to Switzerland in Europe with its 14 percent, and Vienna standing at fourth place in the top five of cryptocurrency cities. Oesterreichische Nationalbank (OeNB), the central bank of Austria conducted its own survey with the outcome of 1.5 percent of Austrians being crypto asset-holders and about 5 percent of the population viewed as potential adopters.

The crypto infrastructure of Austria is a busy landscape. Vienna is home to Bitpanda, an exchange founded in 2014 with over one million active users offering access to Bitcoin, Ethereum, precious metals and over 30 other digital assets. Blockpit is present from 2017, facilitating and simplifying tax filing for those involved with crypto and there’s Coin Factory, a mining company with data centres in Austria.

The first crypto ATM of the country was provided by Coinfinity in 2014, now totalling up to 144, mostly in Vienna, Graz and Linz. Furthermore, as of July 2020, more than 2,500 merchants can accept three types of cryptocurrencies via the payment processor Salamantex throughout the country.

  • In Austria, cryptocurrencies do not qualify as legal tender or as financial instruments but other (intangible) commodities, also treated as “other business assets” for income tax purposes, and OeNB specifically stated that bitcoin is not a currency as it doesn’t provide the known functions of money, due to its limited quantity and no central authority to stabilize it
  • According to the Austrian Ministry of Finance (Bundesministerium der Finanzen, BMF), “mining” and the operation of online trading platforms and crypto ATMs are considered to be a commercial activity and thus treated like any production of goods and services
  • The transaction of exchanging fiat currency for virtual currencies, and vice versa, is tax-free, and mining as well for the lack of “identifiable recipient” but when used for payment, they are treated as traditional means of payment
  • Ewald Nowotny, governor of the OeNB, has pointed out the risks of cryptocurrencies in the past, as “highly speculative investments which entail high risks for individuals”
  • In 2018, Hartwig Löger, the Federal Minister of Finance considered forming cryptocurrency regulations based on the trading rules of gold and derivatives to deal with fraud in the territory
  • The Financial Market Authority (FMA) is concerned with security as well and has warned investors several times of the potential risks of cryptocurrencies, for those lacking regulation or supervision — interestingly, the FMA might be the one to authorize certain business models though, and on a case-by-case basis decide whether an ICO requires authorization
  • The relative majority of respondents in OeNB’s 2019 survey agreed to the statement that with crypto, there is a “great danger of fraud and online theft”, and people with “awareness of crypto” (not asset holders nor interested) considered them as volatile, likely to bring losses, and overall an unattractive investment that doesn’t offer advantages for payments
  • 12% of asset holders
    owns crypto

  • 144
    bitcoin ATMs in the country

  • Intangible commodity or “other business asset” for tax purposes, not legal tender or financial instrument
    definition of crypto

  • Taxable and tax-free
    Exchange with traditional currency and mining: tax-free, used as payment: taxable

  • › 2500 merchants
    accept crypto in the country

  • Vienna
    4th in the top 5 of crypto cities in Europe

GlobalWebIndex,, Library of Congress,


Luxembourg: The small but mighty

An ING bank survey found that on average 5 percent of Luxembourg owns cryptocurrency, while early 2018 Statista data showed that 6 percent of their respondents owned Bitcoin and 2 percent held Ethereum.

There are a limited number of crypto exchanges with operations in Luxembourg but this presence can be taken as still significant when considering the country’s total population of 600,000. While there are no bitcoin ATMs in the country, it is home to a notable exchange Bitstamp, one of the largest and the longest-standing globally as well. Another large crypto-related company based in Luxembourg is which launched in 2011 and now provides more than 44 million private crypto wallets to the market in 140 countries (CoinShares, 2020).

Luxembourg is also a tech hub for blockchain companies, like the FinTech platform LHoFT (The Luxembourg House of Financial Technology), and an ever-growing number of FinTech and RegTech companies based in the country.

  • Luxembourg is one of the few countries to date to recognise cryptocurrencies as “money” as of 2017, as “they are accepted as means of payment for goods and services by a sufficiently large circle of people”, with the important note that cryptocurrencies are still not legal tender
  • In 2018, the government of Luxembourg established again that cryptocurrencies are not actual currencies but are considered to be intangible assets for tax purposes and when crypto is used as a means of payment, regular tax laws apply, thus placing the taxation of virtual currencies in the framework of existing tax laws
  • The country’s parliament, the Chamber of Deputies passed a law in 2019, facilitating the use of blockchain technology in financial services to provide the market with more transparency and legal certainty
  • The Financial Sector Monitoring Commission (Commission de Surveillance du Secteur Financier, CSSF) of Luxembourg issued a statement in 2018 about the risks of ICOs and investing in cryptocurrencies which offer no protection against theft and hacking, and lack liquidity, amongst others
  • THE CSSF agreed that the provision of cryptocurrency services require authorization from the Minister of Finance, the same as other financial services
  • 5% of Luxembourg
    owns crypto

  • 0
    bitcoin ATMs in the country

  • Recognized as “money” but not legal tender
    definition of crypto

  • Taxable
    existing, regular tax laws apply for crypto

  • The FinTech gateway of Europe
    home of LHoFT FinTech platform, housing FinTech and RegTech companies

GlobalWebIndex,, Library of Congress, LHoFT


Finland: The one with the tax stories

To date, there are no official sources providing information on the ownership of cryptocurrencies in Finland but other data types can be somewhat revealing. In 2018, the country’s Tax Administration reported that “the profits made by Finns from cryptocurrencies were over ten times higher than last year”, and based on the analysis of recent years, taxpayers own around 30 million euros from crypto-related transactions.

The first crypto service providers to be legally approved and registered with the Finnish Financial Supervisory Authority in Finland were Northcrypto, LocalBitcoins, Prasos (now Coinmotion), Prasos Cash Management and Tesseract Group, in November 2019. LocalBitcoins for instance is used in over 250 countries across the world, with its headquarters in Helsinki since 2012 and one of the top 100 most successful companies in Finland.

The Finnish also have access to 11 bitcoin ATMs in the country, the most (three) being in Helsinki.

  • In 2014, the Finland Central Bank classified bitcoin as a commodity, adding that it doesn’t meet the requirements to be considered as a payment instrument or an official currency, however by 2017, the same financial institution labelled bitcoin as “revolutionary”, and “apparent[ly] functio[nal] and useful”
  • The Financial Supervisory Authority (FIN-FSA) currently defines virtual currencies associated with ICOs, categorized into three groups depending on their use: payment instrument-like virtual currencies, virtual currencies used as a payment for a certain commodity (utility coin) and financial instrument-like virtual currencies
  • Despite the lack of regulation of cryptocurrencies in the country, the Finnish Tax Authority (Vero Skatt) issued instructions for the taxation of virtual currencies as early as 2013, stating that when transferred to another currency, taxation of capital gains apply, while when used as a form of payment, it is treated as a trade, and the increase in value for the currency might be taxable; and in accordance with EU law, trade in cryptocurrencies is exempt from VAT
  • In 2019, the Act on Virtual Currency Providers was passed in Finland in line with EU Anti-Money Laundering Directive (the Fifth Money Laundering Directive), setting statutory requirements for virtual currency providers which have to be met if they want to carry on their activities in Finland
  • The advisory of FIN-FSA stated in 2017 that cryptocurrencies are risk-filled investment alternatives
  • A 2018 paper published by the Bank of Finland described the concept of a digital currency as a “fallacy” and a “great illusion”, noting that it will never replace the current forms of money nor will ever become the singular form of money without institutional banking
  • FIN-FSA reminded the public in 2019 that “the risks related to virtual currency investments remain unchanged…[and] include sudden major fluctuations in value, data security threats pertaining to exchange services and custodian wallet providers, and the nature of several virtual currencies as speculative investments not involving any inherent source of return."
  • N/A
    number of crypto owners

  • ~ 30 million euros
    owned by taxpayers from crypto-related transactions

  • 11
    bitcoin ATMs in the country

  • Not an official currency
    1. Payment instrument-like
    2. Payment for a certain commodity
    3. Financial instrument-like
    Categories of crypto definitions

  • Taxable and tax-free
    Transfer to another currency: taxable, used as payment: taxes may apply, trade: VAT-free

  • One of the top 100 successful companies in Finland
    The bitcoin trading site LocalBitcoins in Helsinki

Sources:,,, Library of Congress, Kauppalehti

The Netherlands

The Netherlands: The innovator ready to pioneer

According to GlobalWebIndex, 11 percent of asset holders in the Netherlands also hold crypto. This is a fairly high score for crypto adoption, placing it in joint third place in Europe alongside Portugal. Statista’s 2018 data also revealed that approximately 70 percent of their respondents owned Bitcoin and in the first three quarters of 2017, there were approximately 44,000 transactions in Bitcoin from the Netherlands on a trading platform called BTC Direct.

The best-known crypto exchange of the country is called Deribit which used to operate in Amsterdam but moved its headquarters to Panama in February 2020, before 5AMLD became effective. Most Dutch are now likely to rely on international exchanges but there are several other local ones to use as well, such as BL3P, Bitonic, LiteBit, Bitrush or Txbit. Amsterdam is also home to blockchain-focused startups like BitFury, providing bitcoin, blockchain and high-performance computing services among others.

The Dutch also have access to a total of 22 bitcoin ATMs in the Netherlands, with nearly half located in Amsterdam.

  • Crypto is not considered to be money or fiat currency by the Dutch government or financial regulators, and nor cryptos nor crypto service providers fall within the scope of the Dutch financial regulatory framework
  • Earnings from mining or trading cryptocurrencies by an individual is unlikely to be qualified as a taxable income but if a person receives a salary in crypto, then the payout is naturally taxable – and as a general rule crypto held by an individual tax resident will be taxed under the regime of saving and investments in the country, while a corporate entity tax resident will be subject to corporate income tax
  • The Central Bank of the Netherlands (De Nederlandsche Bank, DNB) has started its “DNBCoin” pilot project in 2015, an innovative initiative, to develop prototypes to study the way the bitcoin software can be adapted and used in financial market infrastructures
  • In 2019, the DNB announced that it would begin regulating companies offering cryptocurrency services beginning on 10 January 2020, formulating the requirement for such providers to register with the Bank
  • The Central Bank of the Netherlands highlighted in 2018 that cryptos “are not a universally accepted and stable medium of exchange, a suitable unit of account or a reliable source of value”
  • The Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, AFM) published a warning titled “Initial Coin Offerings (ICO’s): serious risks”, drawing attention to that ICOs are “vulnerable to misinterpretation, fraud, manipulation and may also be structured in a way that they are not subject to supervision by the AFM”
  • In 2018, the Dutch Minister of Finance, Wopke Hoekstra highlighted the need for crypto regulations both on a European and international level in a letter to the Dutch Parliament, stating that the country “wants to play a pioneering role within the European and international approach [to] cryptocurrency” but a series of regulatory steps are needed first especially as ICOs can be “purely speculative in nature"
  • 11% of asset holders
    owns crypto

  • 22
    bitcoin ATMs in the country

  • Not money, not a fiat currency
    definition of crypto

  • Taxable and tax-free
    mining or trading crypto is unlikely to be taxable, but regular tax laws may apply to both individuals and corporates

  • “DNBCoin” pilot
    a project launched by the Central Bank of the Netherlands to study the possible adaptation of bitcoin software in financial markets

GlobalWebIndex, CoinATM, Global Legal Insights, De Nederlandsche Bank

We're always happy to receive thoughts and feedback. If you would be interested in us investigating other countries, please let us know.