Crypto in Southern Europe(EU): Malta leads the way
Despite this summer’s turbulence in the crypto market, adoption and regulation should be considered in any complex assessment. “EU Blockchain Ecosystem Developments,” a new report from EUBlockchain Observatory, combines data from every member country of the European Union, from Portugal to Slovakia, to measure this combination.
Numbers: Over ten blockchain solution providers.
Regulation and legislation: A report from Greece suggests that blockchain, along with its derivative cryptocurrencies, as well as alternative forms of blockchain financing, remain largely unregulated. Greece announced in 2022 a draft bill relating to “emerging information and communication technologies, strengthening digital governance, and other provisions,” which included requirements for the deployment of artificial intelligence (AI), the Internet of Things (IoT), blockchains, and other distributed ledger technologies (DLT).
Numbers: Blockchain projects have raised 47 million euros, and 97 startups have launched blockchain businesses.
Regulation and legislation: In 2019, the Italian Parliament approved an explanation for DLTs and recognized the legal reality of smart contracts.
Taxes: In 2016, the Revenue Agency issued a ministerial resolution that addressed certain aspects of the tax treatment of Bitcoin(BTC) and other cryptos. In accordance with that resolution, an individual’s income from exchanging cryptocurrency isn’t subject to taxation. However, if the individual’s account balance exceeds 51,645.69 euros (about $51,000), they are subject to capital gains tax, which constitutes a flat 26% rate.
Numbers: A total of 139.5 million dollars (141 million euros) was raised.
Regulation and legislation: Three laws have been passed by the Maltese parliament establishing a comprehensive regulatory framework for blockchain and digital currencies. Digital assets, digital currencies, and initial coin offerings are regulated by the Virtual Financial Assets Act.
Taxes: Since electronic money and utility tokens aren’t listed as capital assets in the Income Tax Act, they are not subject to capital gains tax.
Notable initiatives: Malta was the first country to implement a blockchain-based IP register and use the blockchain network to transfer 60,000 records.
Following that, the Maltese government announced three new blockchain projects: one for the certification of food products produced on the island of Gozo, one for a blockchain-based property planning system to ensure process transparency, and one for a blockchain-based copyright and IP system.
Numbers: Blockchain providers raised 44 million euros in funding, and 28 blockchain startups were founded.
Regulation and legislation: While cryptocurrency has not been tried as a legal tender, there is a distinction between utility tokens and security tokens based on the functionality of the tokens.
The registration of virtual asset service providers is regulated by the central bank.
Taxes: Legal entities that provide cryptocurrency-related services must pay a capital gains tax of 28%-35%. At the time of writing, there is no capital gains tax on individual holdings in Portugal; however, this is about to change, as the country’s proposed budget for 2023 assumes a 28% tax rate on individuals.
Notable initiatives: The direct use case in public administration is the Participa.gov platform, which is based on blockchain and is used by citizens to present and discuss their civic initiatives. The agricultural sector uses blockchain to track food products and improve safety. Veracruz, a Portuguese almond producer, has partnered with Arabyka to implement blockchain technology in the supply chain.
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