May 16, 2022. Frankfurt, Germany: ETC Group ( etc-group.com ), Europe's leading specialist provider of institutional-grade digital asset-backed securities, announces that gains from its Crypto ETCs in Germany will now be treated tax free after a one year holding period. This significant development comes about due to the recent update by the German Federal Ministry of Finance (BMF) on tax treatment of gains made from virtual currencies and other tokens.[1]
This clarification to the rules means that crypto ETCs such as BTCE, ZETH and ESOL should be treated in the same way as physical gold ETCs, for example Xetra-Gold® or The Royal Mint Physical Gold, which are already tax-free. German private investors will not have to pay taxes on profits from such investments after a minimum holding period of one year, thanks to the full physical backing of each ETC and the opportunity to redeem them physically. Furthermore, this tax exemption has no cap, meaning investors can hold any amount.
ETC Group's institutional grade exchange-traded products are popular with a wide range of investors who want to continue investing through traditional financial markets while gaining access to the digital asset class. Investors can currently choose from 14 different ETCs at ETC Group in order to be able to participate in the price development of Bitcoin, Ethereum and other popular cryptocurrencies.
Bradley Duke, Founder and Co-CEO of ETC Group said:
ETC Group was formed to provide robust, highly liquid and innovative cryptocurrency ETCs to investors in Germany and abroad. As part of the product development, our goal was to apply the best features of established physical gold ETCs to our crypto ETCs. This includes the possibility for end investors to have the underlying cryptocurrency physically delivered. The natural outcome of this feature is to achieve positive tax treatment for BTCE, ZETH and our other ETC products.
Andre Voinea, Head of German Speaking Regions at HANetf (official distribution partner of ETC Group), commented
This is an exciting development and we have been working towards such clarification for investors for a long time together with our partner ETC Group. The latest development now gives investors another good reason to access our crypto ETPs to invest in cryptocurrencies. The decision to equate physical crypto ETCs with physical gold ETCs introduces parity between the two groups of assets, as there are extensive and long-standing legal guidelines for the latter.
The advantages compared to a direct investment in digital assets include the following:
Easy way to invest without the need for a digital wallet
Investors can buy and sell like any stock or ETF through their regular broker or bank. No need to engage with the technical challenges of setting up a cryptocurrency wallet, products have a ticker and ISIN and can be added to an investor's conventional stock portfolio.
Institutional-grade asset custody
The underlying digital asset is kept in cold-storage at a regulated custodian, and all assets are secured by an independent trustee, thus eliminating issuer default risk, a common feature for physical ETC structures.
100%% physically backed & option for physical redemption
Investors are legally entitled to the underlying digital asset, and can redeem the ETC for the сryptocurrency, alternative to selling on exchange. Hence ETC products provide pure exposure to the underlying digital asset.
Regulated and listed on Europe's major stock exchanges
Approved and issued by BaFin, the listings include Deutsche Börse XETRA, Europe's leading ETF trading exchange.
Important information:
This article does not constitute investment advice, nor does it constitute an offer or solicitation to buy financial products. This article is for general informational purposes only, and there is no explicit or implicit assurance or guarantee regarding the fairness, accuracy, completeness, or correctness of this article or the opinions contained therein. It is advised not to rely on the fairness, accuracy, completeness, or correctness of this article or the opinions contained therein. Please note that this article is neither investment advice nor an offer or solicitation to acquire financial products or cryptocurrencies.
Before investing in crypto ETPs, potentional investors should consider the following:
Potential investors should seek independent advice and consider relevant information contained in the base prospectus and the final terms for the ETPs, especially the risk factors mentioned therein. The invested capital is at risk, and losses up to the amount invested are possible. The product is subject to inherent counterparty risk with respect to the issuer of the ETPs and may incur losses up to a total loss if the issuer fails to fulfill its contractual obligations. The legal structure of ETPs is equivalent to that of a debt security. ETPs are treated like other securities.
