The demand for the use of cryptocurrencies is a legitimate trend among the Greek population. Due to the financial crisis of 2015, falling trust in the traditional banking system, and regulatory prohibitions, cryptocurrency has become the best alternative for solving everyday concerns. According to the most recent statistics, cryptocurrencies are used by approximately 1.87 percent of the population.
Despite this dynamic, the Greek government has yet to implement particular regulatory measures, nor has it "modernized" one of the existing regimes applicable to market participants that use blockchain technology or cryptocurrencies. As a consequence, digital asset markets are completely unregulated. In essence, cryptocurrency transactions are the responsibility of the individual conducting them.
The Hellenic Capital Market Commission (hereinafter:-“HCMC”), the oversight body for digital wallet suppliers and cryptocurrency exchanges, views cryptocurrencies as portfolio assets, and former Greek Finance Minister Yanis Varoufakis has claimed that Bitcoin "can never be and should never be a currency." Despite this position, blockchain technology exists in the public and academic spheres. This article discusses and analyzes the actions taken by Greek authorities to regulate the cryptocurrency market.
In March 2019, the Bank of Greece (hereinafter: -“NBG”) launched the Innovation Center for Financial Technology Activities and joined the European Forum of Innovation Facilitators (hereinafter: -“EFIF”). Since April 2019, the Center has assisted businesses and/or people who are launching or considering launching new technology-based financial products, services, or business models.
Before entering the Greek market, each blockchain application will be reviewed. Enterprises or individuals interested in adopting blockchain technologies in Greece should be aware that such operations may be classified as regulated activities entrusted only to licensed financial institutions under Law 4514/2018.
However, the only recent adjustment in regulations has been the establishment of a special HCMC registry.
Shortcomings of the current regulations:
There are no regulations applicable to the cryptocurrency market recommended by international authorities such as the Financial Action Task Force (hereinafter:-"FATF") or the Bank for International Settlements (hereinafter:-"BIS") have been implemented.
To date, there hasn’t been any relevant judicial decision in Greece that has interpreted (or established) the legal framework for the use of blockchain technology.
There are no special restrictions for financial intermediaries dealing with digital assets.
In the table below, please see a supervisory powers of Greek bodies:
Currently, there are no self-governing organizations or trading groups in Greece that exercise regulatory or quasi-regulatory functions concerning blockchain technology.
On January 31, 2021, HCMC required the registration of suppliers of digital wallets, customs services, and exchange services between cryptocurrencies and fiat currencies. Since storing digital assets are classified as financial instruments as an additional investment service, the wallet must be MiFID-compliant.
According to Article 1 of Decision No. 5/898/3.12.2020 "On the creation of a register of providers of exchange services between virtual currencies and fiat currencies and a register of providers of custodial wallets," providers of the aforementioned services must apply and be registered in the relevant official registries before beginning their activities.
The procedure for applying:
the application - is submitted electronically to HCMC- firstname.lastname@example.org
list of documents - article 3 of the Decision
application fee - 1,500 euros per application
annual fee - 1000 euros
The license is issued by NBG. The license of Greece's payment system allows access to the European financial services market, but it must first complete the certification procedure. Law on the Executive Committee 164/2/ 13.12.2019 establishes the conditions and circumstances for authorizing electronic monetary institutions.
Companies, applying to obtain a license are required to comply with the following requirements:
Minimum share capital - 350,000 euros (deposited with the company's registration)
Knowledge - to confirm the experience of such projects and work in the relevant field
Premises/offices - must rent or acquire premises
Principal's - at least three (no legal persons allowed)
A legal form of a company - in the form of analogs of JSC (joint-stock company) closed and open types, companies with limited or unlimited liability.
Requirements from the applicant companies
business plan and business model;
description of security and client protection procedures, management and control mechanisms;
confirmation of the existence of anti-money laundering tools following the European directive MLD;
identification information on the company’s shareholders, proof of financial capacity - a specific list of documents may be changed by the decision of the licensing authority.
The special permit application form can be downloaded at the following link.
If you need to find information about registered companies, you can use the following resources:
Greece’s Single Open Data Portal
Official Register of Legal Entities
Legal entities and individuals-entrepreneurs can be found using this resource.
Anti Money Laundering requirements
Law 4734/2020, which applies to digital wallet providers and cryptocurrency exchanges that operate in Greece or elsewhere, includes the following AML requirements:
the obligation to apply KYC (know your client) measures;
the obligation to report any suspicious transactions; and
commitment to adopt and implement adequate AML internal policies
Under the law, all entities ranging from credit/financial institutions to chartered accountants, auditors, notaries, and lawyers are the subjects of control.
A special registry has been established by HCMC Decision No. 5/898/3.12.2020, in which all digital wallet providers and cryptocurrency exchanges must register certain information about their AML compliance policy and internal audits, corporate and ownership status, management and business plans.
The following are the reporting requirements:
inform promptly if an employee/supervisor knows or has severe indications or suspicions that amounts of money, regardless of their value, are the proceeds of crime or are related to the funding of terrorism.
provide the relevant information and data on demand and without delay.
Furthermore, each credit institution or financial institution must establish a compliance officer to whom other managers and/or workers may report any anomalous or suspicious transactions, as well as any information that may indicate such activities.
You can also view the entire money laundering regulatory framework on the HCMC website.
Greece does not have a cryptocurrency tax scheme or formal tax guidelines. There is also no authoritative guide to mining revenue taxation. However, in its strategy plan for 2019, the Independent State Revenue Administration (hereinafter:-“IPRA”) declared its intention to propose the following taxation of cryptocurrency income:
for individuals - 15% + progressive tax (solidarity contribution) which is gradually increased from 2.2% to 10 %;
for legal entities -23%.
VAT. According to the Hedqvist case (Skatteverket v David Hedqvist, C-264/14, October 22, 2015), the sale of non-traditional currencies is exempt from VAT. So far, the Greek tax officials have not objected to the case.
The classification of virtual assets/instruments
Because government authorities do not identify digital assets, there is no precise categorization. Despite the absence of special regulation on stablecoins, the following warnings are made about the risks associated with them:
they are likely to qualify as financial instruments under Law 4514/2018, giving rise to MiFID II compliance.
they may qualify as electronic money as defined in Law 4021/2011 and thus trigger a licensing requirement for an electronic money institution
As a result, we can see the government authorities' current disinterest in cryptoregulation issues, as the Greek government has taken no particular actions to regulate cryptocurrencies or declared its opposition to them. So, such an active use by Greeks is expected to result in a clearer position on cryptocurrencies.
The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.