The cryptocurrency Bitcoin is currently experiencing a surge in value, reaching new all-time highs. This has led to an increasing number of private investors incorporating Bitcoin into their portfolios. But what is Bitcoin from an Austrian legal perspective? This blog article aims to provide you with an initial classification of the legal nature of Bitcoin and other cryptocurrencies.
Bitcoin as Money in a Civil Law Sense?
The Bitcoin whitepaper already emphasizes its function as a means of payment. But is Bitcoin considered money in the legal sense? Although it may be surprising, money is not legally defined. In general, it encompasses both domestic and foreign currencies. The Austrian Civil Code (ABGB) contains a provision in § 907b ABGB regarding the payment of monetary debts in foreign currency.
In 2022, following El Salvador, the Central African Republic declared Bitcoin as its official currency. Consequently, some voices now interpret Bitcoin as a foreign means of payment, suggesting that Bitcoin should also be considered as money in Austria. However, this interpretation is rejected by the majority of voices in legal literature. It is argued that a foreign currency and a means of payment are distinct concepts.
Since Bitcoin is likely not considered money, selling Bitcoin for goods would be classified as a civil law barter transaction. This raises numerous questions, such as the extent to which standard consumer protection regulations (KSchG, etc.) apply in this context.
Supervisory Classification under MiCAR
On April 20, 2023, the European Parliament adopted the MiCAR Regulation (Markets in Crypto-Assets Regulation). The MiCAR Regulation aims to establish a unified European regulatory framework for crypto-assets, promoting innovation while ensuring financial stability and investor protection.
MiCAR defines a crypto-asset as a digital representation of value or rights that can be electronically transferred and stored using distributed ledger technology or similar technology (Article 3(1)(2) MiCAR). Bitcoin falls within this definition.
Bitcoin from an Austrian Legal Perspective - Many Questions Remain
Although legal frameworks are increasingly addressing the issue of cryptocurrencies and providing an initial framework, many aspects surrounding cryptocurrencies remain unclear. Additionally, it's worth noting that as of March 1, 2021, profits from the sale of Bitcoin and other cryptocurrencies are subject to a tax rate of 27.5%. However, this does not apply, for example, to NFTs (whose sale is tax-free after a holding period).
Do You Have Further Questions?
The legal classification of Bitcoin and other crypto-assets from an Austrian legal perspective can be highly complex. There are many considerations when selling, transferring, or exchanging cryptocurrencies for goods and services. If you have questions about these or other topics, feel free to contact our law firm at office@geuer.at or by phone at +43-1-4380072. We look forward to hearing from you.