TL;DR
Germany has a robust cryptocurrency regulatory framework overseen by BaFin, with key aspects including crypto classification as financial instruments and the implementation of MiCA regulations.
Crypto businesses must obtain a BaFin license, comply with KYC/AML rules, and maintain strong security and capital requirements.
Cryptocurrencies held for over a year are tax-exempt, while short-term gains are taxed, and mining profits are subject to income tax; profits under €600 are tax-free.
The government is working on additional regulations for exchanges and ICOs to further protect investors.
The MiCA regulations will help harmonize crypto rules across the EU, ensuring smoother operations for businesses and investors.
Germany has established itself as a leader in cryptocurrency regulations within the European Union. As of 2025, the country has implemented a robust regulatory framework to govern crypto assets and related activities. This article covers what you need to know.
For more crypto-related content, refer to our dedicated articles on crypto transaction monitoring, the travel rule in crypto, AML in crypto, MiCA regulations and MiCA Compliant Payments.
Regulatory Framework
The Federal Financial Supervisory Authority (BaFin) is the primary regulator for cryptocurrencies in Germany. Key aspects of the regulatory landscape include:
Cryptocurrencies are classified as financial instruments or digital assets, not legal tender.
The Markets in Crypto Assets (MiCA) regulatory framework, passed in April 2023, is now in full effect across the EU, including Germany.
Cryptocurrency exchanges operating in Germany must obtain a license from BaFin.
Licensing and Compliance
To operate a crypto business in Germany:
Obtain a license from BaFin by submitting a comprehensive application.
Comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.
Adhere to the European Union's Fifth Anti-Money Laundering Directive (5AMLD).
Implement robust security measures and maintain sufficient capital.
Taxation
Cryptocurrency taxation in Germany is structured as follows:
Profits from cryptocurrency held for less than a year are subject to capital gains tax.
Cryptocurrencies held for more than a year are tax-exempt.
Mining profits are subject to income tax.
Annual profits under €600 from cryptocurrencies are tax-free.
Future Outlook
The German crypto landscape continues to evolve:
The government is working on new regulations for cryptocurrency exchanges and initial coin offerings (ICOs) to protect investors and strengthen the crypto ecosystem.
The implementation of MiCA regulations is expected to further harmonize crypto rules across the EU.
By staying informed about these regulations, crypto businesses and investors can ensure compliance and contribute to the growth of Germany's digital asset ecosystem.
Additional Resources:
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