Despite the turmoil that erupted in the crypto market this summer, there is one important long-term marker that should be considered in any complex assessment: the combination of adoption and regulation. EUBlockchain Observatory’s latest report, titled “EU Blockchain Ecosystem Developments”, attempts to measure this mix within the European Union, by combining data from each member country, from Portugal to Slovakia.
As the original report is over 200 pages long, Cointelegraph has prepared a summary with the aim of capturing the most vital insights into the state of crypto and blockchain in Europe. Previously, we covered Western and Northern Europe, but this cycle ends with the Southern Europe region.
Numbers: More than 10 blockchain solution providers.
Regulations and legislation: According to the report, “blockchain, along with their derivative cryptocurrencies as well as alternative forms of blockchain finance, remain largely unregulated in Greece.” In 2022, Greece announced a draft law on “emerging information and communication technologies, strengthening digital governance and other provisions”, introducing requirements for the deployment of artificial intelligence ( IA), Internet of Things (IoT), blockchain and other distributed ledger technologies (DLT). Virtual asset providers are required to register with the Hellenic Capital Markets Commission (HCMC).
Taxes: Income from cryptocurrency transactions is subject to capital gains tax, which is 15% for individuals.
Notable initiatives: Both HCMC and the Bank of Greece have set up their own innovation hub, while the latter has launched a regulatory sandbox in collaboration with the European Bank for Reconstruction and Development.
Local actors: Mobiweb Technologies, an offshore web development company; Synaphea, a blockchain solutions provider for enterprises; Metabloq, a blockchain-based software developer.
Numbers: $46.5 million (€47 million) in total funds raised by blockchain projects, 97 blockchain startups.
Regulations and legislation: In 2019, the Italian Parliament approved a definition of DLTs and recognized the legal validity of smart contracts.
Taxes: In 2016, the Revenue Agency issued a Ministerial Resolution addressing certain aspects of the tax treatment of Bitcoin (BTC) and other cryptocurrencies. In accordance with this resolution, an individual’s income from the crypto exchange is not subject to tax. However, if the individual’s account balance exceeds €51,645.69 (approximately $51,000), they are subject to capital gains tax, which is a flat rate of 26%.
Notable initiatives: Since 2015, the Ministry of Economy and Finance has launched two pilot projects to test DLTs in public administration. The first was SUNFISH (Secure Information Sharing in federated heterogeneous private clouds), which used smart contracts on a blockchain infrastructure to ensure integrity and secrecy in the exchange of information between the Ministry of Economy and Finance and the state police. The second was PoSeID-on, a personal data management and protection platform.
In 2017, the Ministry of Agriculture, Food and Forestry Policy launched Wine Supply Chain 4.0, a pilot project improving the traceability of the wine supply chain.
In 2019, the Ministry of Economic Development partnered with IBM to test a platform based on IBM’s authorized private infrastructure Hyperledger Fabric to provide a solution for players in the textile supply chain.
Local actors: Volvero, a blockchain-based car-sharing app; EvenFi, a regulated peer-to-peer crowdlending platform; EcoSteer, an IoT and blockchain software company.
Numbers: $139.5 million (€141 million) in total funds raised.
Regulations and legislation: In 2018, the Maltese parliament enacted three laws establishing a comprehensive regulatory framework for blockchain and digital currencies. The Virtual Financial Assets Act regulates the field of Initial Coin Offerings, Digital Assets, Digital Currencies and related services, while the Innovative Technology Arrangements and Services Act allows the Malta Authority to digital innovation to oversee the registration of technology service providers.
The country’s financial regulatory framework recognizes four distinct categories of digital assets, subject to a different set of rules: electronic money, financial instruments, virtual tokens (utilities) and virtual financial assets (VFA).
Taxes: E-money and utility tokens are not listed as fixed assets under the Income Tax Act and therefore are not subject to capital gains tax, unlike securities and VFAs.
Notable initiatives: Malta was the first country to install a blockchain-based IP registry and transfer 60,000 records using the blockchain network. Following this, the Government of Malta launched three new blockchain projects: a project to certify food products produced on the island of Gozo, a blockchain-based real estate planning system to ensure process transparency, and a system of copyright and intellectual property based on the blockchain. .
Local actors: Quidax, a digital asset exchange; Vaiot, an AI and blockchain-focused intelligent virtual assistant developer; Effort, a tokenized energy savings platform.
Numbers: $43.5 million (€44 million) in funds raised by blockchain providers, 28 blockchain startups.
Regulations and legislation: Cryptocurrencies are not considered legal tender, but there is a division between utility tokens and security tokens based on the functionality of the tokens. The central bank regulates the registration of virtual asset service providers.
Taxes: Legal entities providing services related to cryptocurrency must pay a capital gains tax of 28% to 35%. As of this writing, there is no capital gains tax on individual holdings in Portugal, but that is about to change – the country’s proposed budget for 2023 assumes a capital gains tax rate. 28% tax for individuals.
Notable initiatives: In public administration, the main use case is the Participa.gov platform, built on the blockchain and used by citizens to present and discuss their civic initiatives. The agricultural sector is applying blockchain to track food products while improving safety. Veracruz, the Portuguese almond manufacturer, has collaborated with Arabyka to apply blockchain technology in the supply chain.
Local actors: Anchorage Digital, a financial platform and infrastructure provider for digital assets; Revault, a multi-party vault architecture provider; Sensefinity, a Hyperledger-based solution for food provenance certification.
Numbers: 86 million dollars (87 million euros) in total funds raised, more than 200 blockchain companies.
Regulations and legislation: Digital currencies are not legal tender and their exchange is exempt from value added tax (VAT). They are largely governed by the legislation relating to goods, namely the general rules of the Civil Code and the Commercial Code. The National Securities Market Commission has issued guidelines on the content and format of promotional campaigns for cryptocurrencies with the aim of ensuring that “product advertising provides true, understandable and non-misleading content, and includes a prominent warning of the associated risks”.
Taxes: Capital gains from the exchange of digital currencies are subject to a variable tax rate ranging from 19% to 23%. Digital currency mining remains unregulated.
Notable initiatives: In 2018, Spain introduced a regulatory sandbox for new fintech projects, including blockchain and digital currencies. In the same year, BBVA bank became the first in the world to use blockchain technology in its financial products.
Local actors: Belvo, a developer of open banking API solutions; Bit2Me, a cryptocurrency exchange; Consentio, a blockchain-based payment platform for logistics.
Numbers: $148.4 million (€150 million) in total funds raised, 48 blockchain companies.
Regulations and legislation: No specific reference to digital currencies and blockchain technologies exists in the country’s legislation. However, the Distributed Ledger Technology Bill was released for public comment in 2021 and is currently undergoing legal review.
Taxes: According to Mondaq, at present, income from crypto trading is taxed under corporate tax at the rate of 12.5% since cryptocurrency is recognized as a taxable asset. Jeff Bandman, an instructor at the University of Nicosia and a member of the EUBOF expert panel, told Cointelegraph that once the blockchain framework law is enacted, the Ministry of Finance will provide further guidance regarding taxation. cryptocurrencies.
Notable initiatives: The local innovation center was launched in 2018 by the Cyprus Securities and Exchange Commission. In June 2020, VeChain announced that the Mediterranean Hospital in Cyprus would use its blockchain-based solution to store COVID-19 results.
Local actors: NoBanx, a crypto depository platform; Simdaq, a platform for mastering trading and asset management; Coinomi, a blockchain wallet.
Key points to remember
The data in the report proves that the island of Malta is still ahead of its Southern European counterparts in terms of boosting the crypto industry. Speaking to Cointelegraph, Joshua Ellul, a professor at the University of Malta and a member of the EUBOF expert panel, highlighted the role of the Maltese government in providing legal certainty to virtual financial assets and providers. of services – and the advantages of the size of the country elsewhere:
“Such agility has been possible due to Malta’s small size, which also explains why Malta’s investment levels are considerably lower. This is not just isolated to the blockchain but to all industries.
Ellul believes it is no coincidence that the forthcoming Pan-European Crypto-Asset Markets (MiCAs) are inspired in some ways by the Maltese regulatory design of digital assets.
“Many say that MiCA has many similarities to Malta’s VFA regime; some say that Malta is “ready for MiCA”. This, coupled with a healthy local ecosystem, including educational programs, successful businesses, expertise in various blockchain-related services and innovative regulation, will make Malta an attractive destination to settle in, which we hope , will change the number of investments in the coming years. ,” he said.