- Andorran government approves regulatory framework for Bitcoin and other digital currencies.
- The government of Andorra seeks to establish itself as a center for Bitcoin firms.
- Andorran Regulations set to develop the nation as a fintech and digital business powerhouse.
The government of Andorra, one of the tiniest microstates in the world, wants to establish itself as a center for Bitcoin firms. In order to clarify their legal status and encourage private investment in this microstate, the Andorran government has adopted a legislative framework for Bitcoin and other digital currencies.
The General Council of the Principality of Andorra enacted the Digital Assets Act on June 30 of last year. As one of the first nations in the world to do so, it establishes a legislative framework for cryptocurrencies and other digital assets.
The law is divided into two sections: the first defines a legal framework for cryptocurrencies, and the second establishes the Andorran Financial Innovation Authority (AIFA), a regulatory organization that will monitor the cryptocurrency market.
Simeon Djankov, Andorra’s Minister of Economy, stated that the new legislation will promote private investment and make Andorra “a more attractive jurisdiction” for businesses involved in the digital economy.
Digital assets, such as cryptocurrencies, are referred to under the act as “property consisting of electronically stored data.” Additionally, it stipulates that digital assets can be purchased, sold, or traded for other assets and used for investing reasons.
The Commission for the Financial Supervision of Andorra (Commissió de Supervisió del Sistema Financer d’Andorra, CSSF), which is responsible for overseeing the country’s financial system, will issue licenses and supervise digital currency exchanges. The implementation of know-your-customer (KYC) and anti-money laundering (AML) controls will be required by exchanges.
Additionally, the law establishes a framework for initial currency offerings (ICOs). Companies in Andorra will be permitted to raise money by issuing digital tokens, so long as they abide by the act’s regulations.
Digital assets and ICOs are subject to taxation in Andorra. Capital gains from the sale of digital assets will be taxed at a rate of 10%, while profits from ICOs will be taxed at a rate of 20%.
The government of Andorra is implementing new regulations as part of a larger strategy to develop the nation as a fintech and digital business powerhouse. Fintech companies have access to a “regulatory sandbox” that the government established earlier this year to test their offerings without being constrained by regulations.
This governmental decision might pave the road for other minor nations to follow suit and improve the business environment for cryptocurrencies in Europe.
This comes after the president of Russia Vladimir Putin Signed a Bill Outlawing Cryptocurrency Payments in Russia. The rule will be put into effect 10-days after it has been published in the government gazette.
