The Czech Republic has approved some laws with the aim of becoming a crypto hub.
These are specifically broad financial market reforms aimed at promoting the growth of the crypto and blockchain sector, with the strategic objective of positioning as a hub for this sector.
Summary
Czech Republic as a crypto hub: the new laws introduced
In particular, a new law just approved introduces a three-year tax exemption period for investments in cryptocurrencies.
In other words, residents in the Czech Republic who hold cryptocurrencies in their portfolio for at least three years will no longer have to pay taxes on any capital gains generated from their sale.
It is not an absolute novelty, given that for example in Germany there has been a similar rule for some time that exempts capital gains even after just one year of holding, but it gives a good idea of the objectives of the Czech Republic.
Another regulation just approved by the Parliament of the Czech Republic is the one that ensures crypto companies and investors can open bank accounts without undue restrictions, thus removing a significant obstacle that previously made it difficult to carry out such activities in the country.
The objectives
As stated by Vice President Jan Skopeček, one of the main supporters of this bill, the primary goal is to attract entrepreneurs from all over the world to the Czech Republic.
In other words, the Czech Republic would like to become a European crypto hub.
It must be said that there is already a crypto hub in Europe, Switzerland, but the Swiss country is not part of the European Union.
Instead, the Czech Republic has been part of the EU since 2004, and in fact, a true crypto hub within the EU does not yet exist.
Malta tried, but without success, while Cyprus is a bit too peripheral, despite being part of the EU and being crypto-friendly.
Germany itself is not a true crypto hub, so for the Czech Republic, this could be a great opportunity. It should be noted that in terms of GDP per capita, Czechia is behind Estonia and Slovenia, slightly above Portugal and Lithuania, and not much above Greece. Furthermore, the Czech GDP per capita is less than half, for example, of the Dutch one.
The crypto landscape in the Czech Republic
Not everyone knows, but the Czech Republic is in fact the homeland of hardware wallets.
In fact, the first hardware wallet ever released on the market was the Trezor, launched in 2014.
Well, the company that produces the Trezor, SatoshiLabs, is Czech, and is based in Prague. Therefore, the Czech Republic can be counted among the pioneers of the crypto sector.
Of course, besides Trezor, there aren’t many other crypto initiatives of international importance in the Czech Republic, but with the new laws just approved, and given the absence of a true major crypto hub within the EU, it’s not absurd to imagine that the country could attract other companies in this sector.
To tell the truth, the new laws just approved do nothing but align crypto regulations with those already existing on traditional assets, but they also offer a more favorable and predictable tax context for investors. This in theory should help, also in light of the entry into force of MiCA throughout the EU.
In fact, the tax exemption has been designed to attract international investors and to increase the attractiveness of the Czech Republic as a destination for activities related to criptovalute.
Skopeček himself recalled that the country has a solid pool of talent and innovative companies in the crypto and blockchain sectors, and that in the Czech Republic some of the best IT companies operating in the field of cryptocurrencies were founded.
He also added that the country should “pamper them,” to avoid pushing them to emigrate elsewhere due to a poor legislative context.
The conseguenze
According to Skopeček, a legal framework that supports the crypto world should create a more favorable context for high-value crypto companies, thus increasing the country’s competitive advantage in the digital economy.
Furthermore, the timing of the approval of the new laws coincidentally aligns with the approach of the implementation phase of the European Union’s crypto market regulation (the MiCA), scheduled for December 30th.
So on one side in the EU there will be the MiCA, which aims to standardize crypto regulations in all EU member states, thus facilitating cross-border operations for providers of these services, while on the other side there will be in the Czech Republic a favorable regulation from a tax perspective.
To tell the truth, this picture does not seem so different from the German one, in which moreover the tax exemption kicks in after only one year of holding, but at this moment it does not seem that Germany has decided to become a crypto hub.
The Czech Republic, on the other hand, has clearly taken this path, and with new and further initiatives, it could indeed expand in this sector, just as other European countries are slowing down.
In such a scenario, should the Czech initiative succeed, it is absolutely conceivable that some other EU country might try to follow its example.
Setting aside Cyprus, which is definitely somewhat marginal due to its geographical position, and Switzerland, which is not part of the EU, there are other countries that might decide to want to compete with the Czech Republic, such as Estonia.
On the other hand, the four major EU countries (Germany, France, Italy, and Spain) do not seem to have taken this direction, not even where the law already seems to be somewhat crypto-friendly, as in Germany.
