Legal Framework Governing Cryptocurrencies in Austria

Unlike conventional currency exchanges, cryptocurrency exchanges are decentralized, which is why governments or banking institutions are unable to exercise control over their transactions or act as intermediaries. Everyone who is somehow involved with cryptocurrencies or going to register a cryptocurrency exchange is well aware of that. However, apart from having advantages, such as direct money transfers, cryptocurrency exchanges also have their disadvantages, which include lack of personal data and authorities’ inability to interfere with transactions. 

A 2018 report compiled by the EU Parliament and dedicated to legal aspects of cryptocurrencies focused on the following:

•  Anonymity;
•  Cross-border nature of transactions;
• Decentralization.

AML Directives Issued by the EU

Governing cryptocurrencies in the EU is done on the basis of several AML directives. In particular, the 5th AML Directive (aka MLD5) introduces a new definition of cryptocurrencies, as well as focuses on areas where cryptocurrencies are used, including e-wallet service provision and cryptocurrency exchange services. 

Because cryptocurrency exchanges get regulated the same way conventional banks and financial establishments do, they are legally bound to verify their clients and report any suspicious activities. 

If you are planning on registering a cryptocurrency exchange in the EU, you will need to make sure that it is in full compliance with MLD5. However, it is worth noting that MLD5 fails to address the problem of user anonymity.

How Cryptocurrencies Get Regulated in Austria

As of now, Austria has no legislative framework governing cryptocurrencies. However, transactions involving cryptocurrencies may fall within the scope of existing legislation. 

For instance, according to the FMA, Bitcoin cannot be deemed a cryptocurrency because it has no issuer. On the other hand, some business models may be required to comply with licensing requirements.

For instance, a platform specializing in trading in cryptocurrencies and making payments in euros is required to apply for a financial service license in Austria as per the Law on Payment Services. Technical services may not be subject to licensing requirements but will most likely have to comply with requirements for obtaining a general trade license in Austria which authorizes engagement in trade activities.

It is also noteworthy that Austria has no legislation regulating sale of cryptocurrencies. Under the current legislative framework, they fall within the scope of the Commodities Law. The proceeds arising from trade in cryptocurrencies are subject to taxation as per relevant regulations.

Mining in Austria is permissible and not subject to any requirements. However, individuals engaged in such activities may be required to comply with general requirements and, therefore, have to apply for a license authorizing trade activities in Austria. If cryptocurrencies are perceived as money, mining will be considered an illegal activity because printing and issuing money is a government prerogative.

Libra Cryptocurrency

Facebook Inc. has recently launched its own cryptocurrency called Libra. Unlike traditional cryptocurrencies, such as Bitcoin, Libra has lower volatility because it is backed by banking or government assets. This makes it much more stable and elevates it to the stablecoin category.

Conclusion

The recent changes in the cryptocurrency industry will most likely cause governments to react by introducing relevant rules and regulations. In particular, the EU Commission will look into the possibility of further regulation and come up with relevant regulations with respect to cryptocurrencies. If you are planning on launching a cryptocurrency business in Austria, you should keep in mind the volatility of cryptocurrencies and analyze each business model on an individual basis.