Germany should not be on the top of Coincub’s table, says Antonio Lukic. Antonio studied law and economics and writes for BeInCrypto Germany.

In its last report, Coincub describes Germany as the most crypto-friendly country in the world. Part of the scoring is regulation, financial services, population, taxes, and much more. A summary of the report is here.

That begs the question: What are they talking about? As a German and a crypto writer, I would like to say: Coincub has it wrong.

Germany and its progressive tax policy. What?

In the report, Coincub cites the reasons for having Germany at number one. One of these reasons is a progressive tax policy related to cryptos. Just last year Germany started to push a framework by the Ministry of Finance on the taxation of cryptocurrencies. It still constitutes “soft-law” as it has not passed a court ruling yet.

Other than that, there is no clear sign of changing the holding period of one year for tax purposes. Users holding their assets for longer than a year pay no tax. But exchanging coins within this year interrupts the one-year period. Other countries, like Austria, have put a tax rule into place that treats crypto gains the same as capital gains from stocks.
In this respect, I am still not convinced that Germany deserves the first place.

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Acceptance by banks. What?

Coincub’s report said that offering digital currencies to such a large customer base is a big step for a financial services provider. Coincub claims that this puts Germany ahead of any other country – potential investors within the bank will no longer need their own authentication in the future.

This statement by Coincub is related to Sparkasse, which will enable its 50 million members to trade crypto in the future. Sparkasse is even considering introducing its own digital currency!

The report suggests that acceptance by financial service providers were seen as a good thing. Why is this even part of the criteria? Do we even need banks and other financial institutions?

The popularity of crypto among financial service providers like Sparkasse is increasing around the world. Just two weeks ago, Swiss investment firm Valor listed Cardano, Polkadot, and Solana on the stock exchange. Now these assets can be traded as Exchange Traded Products (ETFs) on the Amsterdam and Paris Stock Exchanges.

But wait… how is this a good thing? Aren’t we trying to get rid of the banks?  

Security: What?

The main advantage of crypto being accepted by traditional financial institutions is that investors no longer have to create a wallet. And they no longer have to go through an additional KYC process. Investors have usually already gone through this when registering with the bank.

With such products, aren’t we giving the scepter back to the intermediaries – the banks? Shouldn’t we manage our assets ourselves, following the idea of Satoshi Nakamoto and not fall back on those that have disappointed us in the past?

The idea of crypto is to make things easier and not have to register with a bank again.

Crypto should be simpler than the already-existing system. Of course, security is a concern: people may just need more education. Today there are already hardware wallets such as Trezor or Ledger, which guarantee the highest level of security.

Germany and coincub

Crypto adoption: What?

Another criterion of the report is crypto adoption. Depending on which source is used, there are other countries well ahead in this ranking. The best known in terms of user adoption are Ukraine, Russia, Venezuela and India. With an adoption rate of 2.62 percent, Germany is at best in the upper midfield.

Germany and infrastructure: What?

How is Germany winning at infrastructure? What infrastructure was created for crypto in Germany? If you look at the Swiss city of Lugano, you will come to the conclusion that the global crypto hubs are in other countries or cities. Well-known crypto companies are not in Germany. Even our small neighbor Austria has a more popular crypto company – Bitpanda – than Germany.

But these companies can set an example for Germans. German companies could bring workers to Germany and help Germany’s infrastructure. Companies are also an important factor in corporate tax income. But we certainly are not number one when it comes to crypto infrastructure.

Nodes. What?

A few factors affect Coincub’s crypto rankings. For example, Coincub mentions the number of operated nodes as a criterion. Nodes serve to ensure the security of the blockchain, so the more, the better. Germany was reported to have more nodes than the USA, despite a comparatively smaller population.

There are a few different reasons given for why Germany now has more nodes than the U.S., but it might be more about American nodes falling off, rather than a Germany win.

Germany: The federal government: What?

Last but not least, the viewpoint of the ‘new’ German federal government should be mentioned. This very government wants to regulate crypto assets in a positive sense.

However, much of this will depend on European directives such as the MiCA regulation and the TFR regulation. In a few days, the European Commission will decide whether unhosted wallets will be banned. This would mean that wallet providers, like Metamask, would have to go through the KYC process with all users. So in terms of a favorable government, that remains totally up in the air.

Germany and coincub

In conclusion

As the largest economic power in the EU, Germany is a clear mood driver. But no one should underestimate its European partners when it comes to upcoming regulations.

As far as crypto is concerned, Germany retains sovereignty in the areas of taxes and credit or securities law. But crypto could be a different kettle of fish. In the future, many things may only be solved at the European level.

As for putting Germany at the top of a list of the most crypto-friendly nations in the world? This is quite an underappreciation of other crypto-friendly countries.

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