Selva Ozelli, an international tax attorney and CPA, writes a monthly Expert Take piece about the intersection of emerging technologies and sustainability, as well as the latest developments in taxes, AML/CFT laws, and legal challenges influencing crypto and blockchain.

In Q1 2022, Germany has risen to the top of Coincub’s list of the most crypto-friendly countries. The European country permits its long-term domestic savings industry to use crypto investments, and its number of Bitcoin and Ethereum nodes is second only to the United States, thanks to its zero-tax policy on long-term capital gains from crypto.

Adoption of the blockchain

Germany was the first country to adopt a blockchain strategy in 2019 in order to capitalize on the technology’s potential for advancing digital transformation and to help the country become a desirable hub for the development of blockchain, Web3, and metaverse applications in fintech, climate tech, business, and government technology, including Germany’s digital identities project.

The German Savings Banks Association, which represents 400 savings banks across Germany, has begun building fintech blockchain applications that will allow consumers to purchase and sell cryptocurrencies.

Various firms have developed NFT, metaverse, Web3, govtech, and crypto payment applications that are commonly utilized in e-commerce to purchase items, including Volkswagen, About You, SAP, BrainBot, and BigchainDB. According to Jacopo Visetti, an adviser to C3 — a group of operators and investors that back enterprises aiming to cut emissions — Reason’s why Germany is the most crypto-friendly country in the world

Roundhill Investments, an ETF sponsor focused on unique thematic funds, launched the Roundhill Ball Metaverse UCITS ETF on the Deutsche Börse Xetra, describing it as Germany’s first metaverse exchange-traded fund, to help fund the development of these technologies. In addition, the Fund Location Act in Germany allows pension funds, insurance firms, family offices, and corporate investment funds to invest up to 20% of their assets in digital assets.

Adoption of cryptocurrencies

Approximately 2.6 percent of Germans used cryptocurrencies as of the end of 2021. And according to a recent report from KuCoin, 44% percent of Germans are motivated to invest in crypto.

German investors can get involved in crypto and blockchain through companies and platforms like 1inch Exchange, Nuri, FinLab, Minespider, the NAGA Group, Tangany, Coindex, CryptoTax, Upvest, Fiona, Blocksize Capital, USDX Wallet, Bitbond, and the Iota Foundation, or they can shop with Dash on Sugartrends. Reason’s why Germany is the most crypto-friendly country in the world. Mark Mason, Dash’s communications and corporate relations manager, told me:

“Dash is a cryptocurrency that allows for financial freedom across boundaries. It helps consumers become more financially included by allowing them to use their phones as bank accounts. It’s decentralized, permissionless, and resistant to censorship.”

Germany is one of the top ten countries for crypto mining, and Northern Data, the European Union’s largest mining company, is almost entirely powered by renewable energy. As a business, cryptocurrency mining is taxable. Reason’s why Germany is the most crypto-friendly country in the world

Startups – Crypto-Companies

Denario and Penta, as well as Cologne-based Nextmarket and Frankfurt-based Northern Data, are among the many blockchain startups that have settled in Germany’s crypto capital, Berlin. Fintech angel investor Christian Angermayer’s Apeiron Investment Group is backing Berlin-based Denario and Penta, as well as Cologne-based Nextmarket and Frankfurt-based Northern Data.

Paycer, a financial business focusing in cryptocurrencies and decentralized finance based in Hamburg, is working on a bridge protocol that will connect DeFi and cross-chain crypto services with regular banking services.

Forget Finance, a Berlin-based fintech firm, focuses on encouraging young people to save and invest in cryptocurrency through online coaching that combines AI bots and genuine financial professionals.

Digital currency issued by a central bank

According to a poll conducted by the Deutsche Bundesbank, the share of cash payments made by German consumers in point-of-sale transactions fell from 74 percent in 2017 to 60 percent in 2020. As a result, the Bundesbank has started working on asset settlements using distributed ledger technology.

Meanwhile, the European Central Bank is investigating the possibility of constructing a CBDC, called the digital euro. Security and general acceptance are significant issues, according to recent research commissioned by the ECB and based on consultations with panels of EU residents. Reason’s why Germany is the most crypto-friendly country in the world

Nonfungible tokens and the metaverse

The metaverse is the Web3’s third wave, and it’s changing how people interact, socialize, work, play video games, donate to charity, buy and sell nonfungible tokens, and attend concerts, athletic events, and conferences. The ZKM Center for Art and Media in Karlsruhe bought many NFTs in 2017, far ahead of the 2021 frenzy, and is presently exhibiting them on the “ZKM Cube,” an outdoor, publicly accessible cube-shaped screen, with works from its own collection and private lenders. Margit Rosen, the head of the ZKM’s collection, archives, and research department, revealed the details in a conversation with me.

Metaverse growth 2020-2024

Since the beginning of the NFT craze, Adidas has collaborated with the Bored Ape Yacht Club and Prada on a charitable climate-focused NFT art initiative on the Polygon blockchain to raise awareness. Volkswagen, a German automaker, has also launched a successful interactive NFT marketing campaign.

Use of cryptography without permission

Germany is a member of Europol’s Joint Cybercrime Action Taskforce, which is tasked with combating cross-border cybercrime. According to a Europol study from 2022: Reason’s why Germany is the most crypto-friendly country in the world