5 months ago 8 min read

Cold Scandinavia and Burgeoning Baltics; Northern Europe's Crypto Situation

Table of Contents

Despite the turmoil that the cryptocurrency market saw this summer, the combination of acceptance and regulation is a crucial long-term indicator that should be taken into account in any comprehensive evaluation. In its most recent report, "EU Blockchain Ecosystem Developments," the EUBlockchain Observatory attempts to quantify this combination inside the European Union by merging data from every member state, from Slovakia to Portugal.

Given that the entire study is over 200 pages long, Cointelegraph created a summary in an effort to highlight the most important details regarding the development of blockchain and cryptocurrencies in Europe. Cointelegraph began with a survey of the nations generally referred to as Western Europe before moving on to the nations of Northern Europe.

Key Takeways:

The CEO of BlackBird Law and a member of the EU Blockchain Observatory, Kristina Lillieneke, addressed the relatively low numbers displayed by Scandinavian nations with reference to the cryptocurrency business while discussing the report's key findings. While acknowledging the significance of high taxes, Lillieneke also drew attention to local issues including regulatory uncertainty and media and bank scare tactics. According to her:

“Most banks have been blocking their customers from trading in crypto and founders of crypto companies have had their bank accounts forcibly closed. As most people are still dependent on the fiat banking system in the Nordics this is a strong deterrent to making innovations.”

The expert used Sweden as an example, where the regional financial watchdog, Finansinspektionen, has waged an ongoing campaign against Bitcoin. Head of Finansinspektionen Erik Thedéen has criticized Bitcoin in a number of articles, saying it is only used by criminals to launder money, fund terrorism, and pose a serious environmental hazard.

Even with the planned pan-European MiCA framework, Lillieneke expressed skepticism about the likelihood of a U-turn in the Nordic region. She believes that MiCA itself does not offer a solution to the well-known issues:

“The regulations in Europe seem only to aim at limiting the market and innovation around everything that is decentralized and has the potential of empowering people while it favors centralized solutions run by the states, the EU or big-tech.”

More controversy has arisen as a result of Estonia's recent transformation. Estonia was one of the world's first countries to adopt blockchain technology and maintained a policy supportive of cryptocurrencies until 2021, when the new regulations for VASP licensing undid all the industry's prior gains. Marianna Charalambous, research project manager at the University of Nicosia and a participant in the EU Blockchain Observatory, pointed out that the nation continues to be a pioneer in the adoption of public blockchains and has stated this:

“Estonia remains an advocate of public sector blockchain initiatives on a national and European level, as a wide number of blockchain applications are being implemented in the public sector. Looking at the use of blockchain on an institutional level we can identify a different approach compared to the private sector which has been affected by the new legislation.”


Numbers: 15 blockchain firms were created after initial coin offerings (ICOs) raised $39.9 million (40 million euros).

Regulation and Legislation: The main regulatory bodies in the nation are the Swedish Financial Supervisory Authority and the Swedish Data Protection Agency. The report claims that the nation still lacks any clear crypto and blockchain legislation: "One must often use the existing legal framework and force blockchain to fit within that framework."

Taxes: The local tax experts state that capital gains from selling cryptocurrency are subject to a 30% tax, despite the fact that the report contains no information about the country's tax policy regarding cryptocurrency.

Notable Initiatives: In 2016, the Swedish land-ownership authority Lantmäteriet started experimenting with blockchain technology, which led to the creation of a pilot project to create smart contracts for future real estate transactions. On the platform, developers successfully finished the first transaction in June 2018. One of Sweden's biggest banks, SEB, launched the Nordic Fund Ledger with Nasdaq as a partnership to enhance mutual fund trading through the use of blockchain. A project was supposed to start in 2020, however there is no proof that it did as of the time of publication.

Local Players: Decentralized user data storage system 3Box, Ethereum-based education platform AIAR, and Bitrefill, a company that sells digital gift cards and mobile airtime and takes cryptocurrency as payment.


Numbers: 24 blockchain firms raised a total of $32.4 million (32.5 million euros) for their respective blockchain projects.

Regulation and Legislation: There are no laws expressly covering cryptocurrency in Denmark. The largest bank in Denmark, Danske Bank, announced in 2021 that it would not only refrain from providing any cryptocurrency services to customers directly, but also that it would not obstruct any transactions coming through crypto platforms.

Taxes: Cryptocurrency earnings are subject to income tax, which is estimated to be around 37%, according to Coincub: "If you're a high earner, your crypto gains — as part of your overall income — might go up to 52% tax."

Notable Initiatives: A blockchain-enabled shipping solution called TradeLens was unveiled in 2018 by the Copenhagen-based shipping company Maersk and IBM with the aim of fostering safer and more effective international trade.

Local Players: According to the survey, the Danish cryptocurrency firms with the biggest names are those that were founded there but registered in other countries, such Chainalysis, Blockshipping, and MakerDAO.


Numbers: 18 new blockchain companies

Regulation and Legislation: The Finnish Financial Supervisory Authority is the primary regulatory body for all matters crypto-related in the nation. The Act on Virtual Currency Providers entered into force in 2019. Any organization that offers or markets its crypto-related services to Finnish customers is required to register. The many varieties of digital currencies are not differentiated in any way by the Virtual Currency Act.

Taxes: The capital gains tax on profits from the exchange or sale of cryptocurrencies is 30% of income up to $29,922 (30,000 euros) and 34% of revenue over this amount.

Notable Initiatives: The collaboration between the Finnish government and Essentia to develop blockchain-based solutions for smart logistics was first announced in 2018.

Local Players: LocalBitcoins is a peer-to-peer (P2P) platform for digital currencies. Haja Networks is a developer of distributed and decentralized database solutions based on blockchain technology. SOMA (SOcial MArketplace) is a decentralized peer-to-peer (P2P) platform on Ethereum for trading and exchanging physical goods.


Numbers: Total equity funding of $26.9 million (27 million euros), 22 blockchain solution companies.

Regulation and Legislation: The Norwegian Data Protection Authority, the Financial Supervisory Authority (FSA), Norges Bank, and the Norwegian Tax Authority are the advisory and regulating bodies for blockchain and cryptocurrencies. If consumers want to invest in cryptocurrencies, the FSA has already underlined that a legal framework and norms for investor protection are required. The research states that it is doubtful that Norway would pass any new cryptocurrency laws before the EU passes its flagship piece of legislation, the Regulation on Markets for Crypto-Assets (MiCA).

Taxes: Cryptocurrency assets are taxed similarly to other Scandinavian nations' capital gains in Norway. Due to a flat corporate income tax rate, the annual tax rate for private persons is 22%, while it is the same for legal companies. However, if a person's annual income is more above a specified amount, they will pay more.

Notable Initiatives: A regulatory sandbox was formed by The FSA in 2021 to promote fintech innovation. A central bank digital currency (CBDC) is being actively investigated by the Central Bank of Norway and is currently undergoing a two-year phase of technical testing.

Local Players: Choose from ViPi Cash, an online platform that uses blockchain technology to facilitate international money transfers, a cryptocurrency platform backed by CO2 emission permits, and Diwala, a decentralized platform for skill verification of persons utilizing decentralized ledger technology.


Numbers: 15 new blockchain companies

Regulation and Legislation: The country's regulations on cryptocurrency are still mostly lax. Investors were warned to "be extra attentive, as cryptocurrencies operate in an infrastructure that is now defined by lower regulation than in the financial and capital markets," according to the Financial and Capital Market Commission, the top local financial regulator, in 2020.

Taxes: According to the Latvian PIT Act, cryptocurrency is a capital asset that is subject to the 20% general capital gains tax.

Notable Initiatives: The Latvian Economic Ministry unveiled two blockchain-based pilot projects in 2019. The adoption of a blockchain-based cash register in the first one could improve the State Revenue Service's capacity for oversight and lessen the shadow economy. The second option would make it simpler to form a limited liability business by utilizing blockchain technology in the Enterprise Registry. The national airline airBaltic added Ether (ETH) and Dogecoin (DOGE) as payment options in 2021. In 2014, it first began to take Bitcoin (BTC).

Local Players: Blockchain development and consultancy company Blockvis, blockchain-powered online identification provider Velvet, and software developer Soft-FX all worked with a number of significant cryptocurrency exchanges, including Binance, Bifinex, and others.


Numbers: 31 blockchain firms raised $1.09 billion (1.1 billion euros) from regional businesses.

Regulation and Legislation: According to the research, Lithuania is "one of the most pro-blockchain governments in Europe" and was one of the first to release legislation on initial coin offerings (ICOs) in 2018. Every source of digital assets must register with the nation's Center for Registers by the end of 2019.

Taxes: The corporate tax rate for cryptocurrency businesses is 15%, while the income tax rate for individuals is the same flat rate.

Notable Initiatives: A prototype for central bank-issued, blockchain-backed currencies called LB Chain was introduced by the Bank of Lithuania in 2018 as a digital currency sandbox.

Local Players: Decentralized application (DApp) market intelligence provider DappRadar, blockchain-based digital bank Bankera, and gamified online education portal BirDegree.


Numbers: 200 blockchain solution providers and $284 million (285 million euros) raised.

Regulation and Legislation: The first nation in Europe to offer explicit rules and laws for virtual currencies was Estonia. Digital currencies are defined by local law as "value represented in digital form that is digitally transferable, preserveable, or tradable, and that natural persons or legal persons accept as a payment instrument," but they are not regarded as legal tender and do not otherwise have the status of money.

Taxes: Since they are considered to be property, the trade of digital currencies is subject to a 20% capital gains tax.

Notable Initiatives: According to the report, the blockchain-enabled e-Residency program "has proven to be a significant facilitator of blockchain business activity in the country"; however, it should be noted that when the nation tightened the definition of virtual asset service providers (VASPs), more than 1,000 licenses from crypto firms were revoked. In addition to the state gazette and the nation's digital court system, the government uses a highly scalable and privacy-focused keyless signature infrastructure blockchain for its healthcare, property, company, and succession registers.

Local Players: Idealogic, a full-cycle software development company, Cryptodevelopers.net, a maker of cryptocurrency wallets, and Solve.care, a provider of blockchain technology for the healthcare industry, are three companies with expertise in Fintech product design and custom software development.

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