European countries, and EU member countries within Europe, differ in their regulatory approach to crypto currencies. Therefore, in order to understand the current state of affairs with regards to regulating crypto currencies, it is necessary to enter into a state by state analysis. Prior to that, we shall examine the current status at the EU level.

The EU is yet to adopt a regulatory framework for crypto currency activities.

However, within the EU, several member countries have decided to apply existing EU regulatory frameworks on crypto currency activities, while most EU members are still weighing their approach to these activities.

Amongst those countries which have chosen to apply existing regulatory frameworks on crypto currency activities are Luxembourg and Germany.

<u>Luxembourg</u> - exchanges may be licensed and regulated as either payment institutions or electronic money institution under the EU Payment Services Directive (PSD).

One of the leading examples is Bitstamp, a bitcoin exchange which is widely acknowledged as being the first licensed bitcoin exchange in the EU. It is licensed as payment services provider allowing it to provide services under the Luxembourg Law on payment services.

Another example is Snapswap, licensed as an e-money institution, it provides a solution for remote digital onboarding which includes a blockchain based solution.

<u>Germany</u> - German regulator BAFIN has expressed its view that crypto currencies activities may be licensed and regulated as either brokers, market makers or exchanges under the MIFID regulatory scheme.

Existing licensed entities in Germany include Bitcoin Deutschland AG, which is described as the only bitcoin trading platform in Germany. Bitcoin Deutschland AG is acting as tied agent for FIDOR Bank AG. In other words, FIDOR bank holds the license to offer the bitcoin activities, while the platform acts as tied agent to that bank. Another example is Bitbond, a peer to peer bitcoin lending platform which is fully licensed and supervised by BAFIN.

<u>Poland</u> - Poland’s Central Statistical Office (GUS) has recognized the trading and mining of crypto currencies as an official economic activity. In practice, this decision means that companies active in the industry are now able to register with the agency.

In addition, in early 2017, a law proposal introduced a plan to establish a Central Database of Accounts under the direction of the Ministry of Finance, which would provide authorities rapid and easy access to information on the locations of certain funds and other liquid assets. The scope of the law includes also “entities that offer products or services that enable storage of authentication data required to access virtual currencies". Basically, all covered entities will be required to notify authorities within 24 hours of the opening or closing of an account, or of any change in an account's information. This proposal represent Poland's attempt to regulate crypto currency activities.

<u>Spain</u> - In 2014 the Ministry of Treasury issued a ruling that bitcoin will be treated as an electronic payment system for purposes of gambling law.

To this date, most EU member countries have not published their stand on how to treat crypto currency activities. Many of them relied on the EBA warning about the potential risks associated with crypto currency activities.

This is the status of Austria, Belgium, Cyprus, Greece, Hungary, Lithuania, the Netherlands, Portugal and Slovenia.

Switzerland was one of the first countries to license crypto currencies activities, with Swiss financial regulator defining licensing requirements for bitcoin kiosk operators. Quite recently, Switzerland made another step forward by being the first country to have a bank allowing its clients to hold and exchange bitcoins, through a cooperation between Falcon Bank and Bitcoin Suisse AG.

As we can see, the regulatory landscape in Europe varies when it comes to regulating crypto currencies, and given the booming of crypto currency nowadays, we can fairly expect to see more changes in this landscape, especially amongst EU member countries.