Federal Council Decides on Crypto Transparency Act: New Reporting Obligations for Crypto Service Providers

Germany Implements DAC8 Directive on Schedule

This Friday, the Federal Council has a law on its agenda that is central to the German crypto market. Under item 8 of the 1060th session, a vote will be held on the law implementing Directive (EU) 2023/2226, better known as DAC8 ^[1]. The Finance Committee recommends approval ^[1].

With this law, Germany is implementing the European DAC8 directive into national law on schedule by the end of 2025 ^[1]. The core of the initiative is the introduction of new reporting obligations for cryptocurrencies ^[1].

Comprehensive Reporting Obligations for Service Providers

The Crypto Transparency Act introduces comprehensive reporting and due diligence obligations for providers of crypto asset services ^[1]. The aim is to provide the tax authorities with structured access to information on crypto transactions and to expand the automatic exchange of information within the EU ^[1].

The new regulations will make the crypto market more transparent – and faster than many expect ^[1]. The implementation of the DAC8 directive is equally relevant for both investors and providers ^[1].

Future Role of the Federal Central Tax Office

With the implementation of the Crypto Transparency Act, the Federal Central Tax Office will play a central role in monitoring and coordinating reporting obligations ^[1]. The authority is intended to serve as a central point of contact for information on crypto transactions and to coordinate exchanges with other EU member states.

International Perspective: USA Discusses Tax Relief

While Germany is tightening reporting requirements, a different debate is being conducted in the USA. Representatives of the Bitcoin Policy Institute (BPI), a non-profit Bitcoin advocacy organization, warn that U.S. lawmakers have not provided for a de minimis tax exemption for Bitcoin transactions below a certain threshold ^[2].

"De minimis tax legislation could be limited to stablecoins, leaving everyday Bitcoin transactions without exemption," said Conner Brown, Head of Strategy at BPI, on X, adding that the decision to exclude Bitcoin would be a "grave mistake" ^[2].

In July, Wyoming Senator Cynthia Lummis introduced a bill that would provide a de minimis tax exemption for crypto transactions of $300 or less, with an annual cap of $5,000 for tax-free transactions and sales ^[2]. The bill also included tax exemptions for digital assets used for charitable donations, as well as tax deferrals for crypto earned through mining proof-of-work protocols or staking to secure blockchain networks ^[2].

Different Approaches to Crypto Regulation

The developments show different regulatory approaches: While the EU and Germany focus on transparency and reporting obligations, U.S. advocates are discussing tax relief to make Bitcoin more attractive as a means of payment. BTC advocates argue that a tax exemption for small Bitcoin transactions would increase its use as a medium of exchange rather than just a store of value, which could enable a new financial system based on Bitcoin ^[2].