Driving Competitiveness of the German and European Crypto Industry and Positioning Blockchain as a Key Technology

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Cointime2025/01/10 12:22

By:Cointime

From greenfield xyz by Jascha Samadi, Christian Zimmermann, Markus Hujara

On 23 February, Germany will elect a new parliament. The election comes in a year when Germany and Europe need to set their decisive course as a leading hub for the crypto industry and blockchain as a key technology. Together with Areta , a Germany-based specialized investment bank for crypto and web3, we have compiled a position paper on the levers for innovation-friendly conditions and regulatory clarity for entrepreneurs, users and investors.

The position paper is available in German here . We are using this version to start an exchange with various parties and opinion leaders about their possible political positions on crypto.

The crypto industry offers Germany and Europe a unique opportunity for a “second digital chance”. The Web2 era, characterized by the rise of social media, produced only a few noteworthy German unicorns. Digital value creation, along with critical socio-technological decisions, largely bypassed our continent. Europe also lags behind in artificial intelligence due to data availability and data concentration challenges. The outlook for the crypto economy is far more promising: globally, about one in four venture-capital-backed crypto projects with unicorn status originates from Europe. Berlin, Paris, and Lisbon rank among the world’s leading crypto hubs with strong developer communities. With MiCAR, the EU has become the first significant jurisdiction globally to establish comprehensive crypto regulations, giving centralized participants a head start in regulatory clarity on which they can base and develop their businesses.

In the German public discourse, crypto is still almost exclusively discussed as a speculative asset class. This view is too narrow. At its core, the focus is on talented project teams and startups developing innovative products and infrastructure for the next iteration of the internet. They create jobs in a future-oriented sector that will significantly increase the efficiency of many other industries. This key technology is not only crucial for purely economic reasons. Blockchain is ideally suited – if further developed with the right priorities – to protect and digitally defend European values such as data privacy, copyright, individual empowerment, and intellectual property, especially in the age of AI.

As this hyper-mobile industry matures, the global competition for local developer teams is heating up. In 2024, we have already experienced a significant sentiment shift toward crypto in economic and government circles worldwide. Within Europe, France has emerged as a driver of the crypto industry, actively supporting startups and businesses operating in the space. In 2025, new incentives and campaigns will intensify the geographical competition and decisively shape the future crypto landscape. Germany now needs a clear and strong commitment to its domestic crypto economy. This includes striving for innovation-friendly frameworks and regulatory clarity for entrepreneurs, users, and investors. A new digital era is possible, with Germany and Europe as significant players with technological leadership and regulatory sovereignty. Let us now build the infrastructure and setup for a flourishing crypto made in Europe—crypto for Europe!

Regulation

DeFi:Decentralized Finance (DeFi) was intentionally excluded from MiCAR to create space for innovation. Germany must reclaim its position as an innovation leader by embracing this fundamental decision and presenting moderate regulatory approaches suitable for decentralized projects. This could also include a deliberate decision to refrain from regulation for now, especially if the U.S. takes this path.
DAO Regulation:Every token holder is potentially a member of a Decentralized Autonomous Organization (DAO). There is no clear legal framework for DAOs, leading to the risk of their classification as general partnerships with unlimited liability. Germany must establish clear regulations for limiting token holder liability and clarify that DAOs are not trade entities.
Data Protection:All information on the blockchain is public. For widespread adoption, solutions must enable privacy-compliant interactions, e.g., for salary payments, patient data, DePin solutions, or AI agents. Previous approaches have often failed due to potential conflicts with AML/ATF goals. Germany needs a legal framework that aligns AML/ATF with legitimate privacy interests and allows projects to develop legally secure solutions.

Supervision

Intent to Support:BaFin is perceived as not crypto-friendly compared to its European counterparts. Relatively slow processes often lead German developer teams to choose other jurisdictions for token issuance/listings. BaFin needs a clear mandate to promote Germany as a financial hub, more resources for specialists in digital assets, and a general paradigm shift toward digital assets.

Funding

Funding and Grant Schemes:Due to Basel III’s 1,250% equity capital requirements, the KfW cannot directly or indirectly support crypto projects. Germany, therefore needs a dedicated program to support crypto startups. France, for example, provides a high-leverage model: Bpifrance has created alternative structures for international fund investments, with the condition that double the invested amount flows back into French startups.

Taxes

Taxation of Token Issuance:Projects currently have to fully tax revenues from issuing currency tokens. For utility tokens, it is unclear whether future obligations can be recorded as liabilities. Development costs can only be deducted in subsequent years. Germany needs internationally competitive and IPO-equivalent taxation of token issuance.
Value-Added Tax (VAT):It remains unclear whether and to what extent crypto transactions are subject to VAT. The tax authorities need to clearly confirm that such transactions are exempt from VAT.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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