The State of Crypto Adoption in Austria
Source: Envato
The state of crypto adoption in Austria is growing, but it has some ups and downs.
In 2024, Austria's cryptocurrency market is expected to be worth about $260.6 million. However, it's predicted to shrink a little in 2025, down to $250.1 million. About 41.64% of Austrians are expected to use cryptocurrencies in 2024, with a slight increase to 41.77% in 2025.
More businesses in Austria are starting to accept cryptocurrencies as payment, which is helping adoption.
The government hasn't made any laws against using or trading cryptocurrencies, but there are some rules to follow. The Austrian Financial Market Authority has given guidelines to help protect people who use cryptocurrencies.
Austria is also very interested in blockchain technology, which is the system behind cryptocurrencies.
The government and private companies are working on blockchain projects. For example, they're using blockchain to prove that digital files haven't been changed, and to help people trade electricity they make at home.
According to Stromdau, their system has successfully demonstrated that by using IT and blockchain technology, the average distance between where electricity is generated and where it is consumed can be significantly reduced to less than 100 kilometers.Â
Some big energy companies in Austria are testing ways to use blockchain for buying and selling electricity between people. This could make it cheaper and easier for people to share the energy they produce, like from solar panels.
Crypto Law in Austria
Source: Envato
Currently, Austria does not have dedicated cryptocurrency or fintech-specific laws. Instead, the country applies existing financial services regulations to crypto-related activities based on a "technology-neutral" supervisory approach.
The Financial Market Authority (FMA) treats cryptocurrencies as commodities rather than financial instruments or fiat currency. However, this classification doesn't mean crypto-related businesses are unregulated.
Depending on their specific features, Business models involving cryptocurrencies may trigger licensing requirements under various Austrian financial regulations:
- Austrian Banking Act (BWG) for raising funds for cryptocurrency investment
- Austrian Payment Services Act 2018 (ZaDiG 2018) for account consolidation or payment initiation
- Securities Supervision Act 2018 for investment advice or portfolio management related to cryptocurrency financial instruments
- Austrian Alternative Investment Fund Managers Act (AIFMG) for pre-defined cryptocurrency investment strategies, including mining
- Electronic Money Act 2010 for issuing electronic money
In terms of sales regulation, Austria applies general securities and commodities laws to the sale of cryptocurrencies and tokens.
The FMA has classified tokens into three broad categories of offerings that may be subject to prospectus requirements under Austrian securities laws.
The FMA classifies tokens broadly:
- Security/Investment Tokens: Represent assets or payment claims, often similar to bonds or shares, and may trigger prospectus requirements and authorization for trading platforms.
- Utility Tokens: Often comparable to vouchers, these tokens can grant access to a product or service. Their classification for supervisory purposes can be complex.
- Payment/Currency Tokens: Accepted as payment for goods or services, serving a similar purpose to payment tokens.
Austria has also implemented anti-money laundering (AML) regulations in line with the EU's Fifth Money Laundering Directive. These regulations require cryptocurrency-related businesses to register with the FMA and impose significant fines for non-compliance.
Taxation of Cryptocurrency in Austria
Source: Envato
Since March 2022, the country has defined cryptocurrencies in its tax law as digital representations of value that can be used for trading and aren't issued by any central authority.
For most people holding cryptocurrencies, the income they get from these assets is taxed at a special rate of 27.5%.
This applies to both regular income (like interest) and profits from selling cryptocurrencies. Importantly, this tax is separate from the regular income tax system, so it doesn't affect how other income is taxed.
The exchange of a cryptocurrency for another cryptocurrency could also lead to taxation under Section 31 Austrian Income Tax Act. In the case of an exchange, the difference between the fair market value of the cryptocurrency given and the acquisition cost was calculated. If there was less than one year between the acquisition of the cryptocurrency and the time of its exchange, it was again a speculative transaction.
There are some exceptions to this rule. For example, if someone makes private loans using cryptocurrencies, that income might be taxed differently.
Also, if dealing with cryptocurrencies is the main part of a business (like a cryptocurrency trading company), then the profits are taxed like regular business income, which can be at higher rates.
When it comes to losses, Austria allows people to balance out gains and losses from cryptocurrencies with other investment income, like stock dividends. This can help reduce the overall tax burden.
Starting in 2024, Austrian banks and other service providers will have to automatically deduct the 27.5% tax when people earn money from cryptocurrencies. Until then, people can choose to have this tax taken out automatically, or they need to report their cryptocurrency income on their tax returns.
Starting in 2024, if you are subject to taxation in Austria, the crypto capital gains tax will be automatically deducted by domestic brokers or exchanges.
For businesses, the tax treatment depends on how central cryptocurrencies are to their activities. If it's just a side part of the business, the 27.5% rate applies. But for businesses focused on cryptocurrencies, like mining operations, they pay regular business taxes, which can be higher.
Regarding VAT (value-added tax), exchanging cryptocurrencies for regular money (or vice versa) doesn't incur VAT. Also, mining cryptocurrencies isn't subject to VAT. However, if someone buys goods or services with cryptocurrency, VAT is applied just like with regular money purchases.
Use Cases of Cryptocurrency in Austria
Source: Envato
The adoption of cryptocurrencies in Austria seems to be growing across various sectors, with particular strength in tourism, retail, and financial services.
Retail Payments
Several businesses in Austria, particularly in Vienna and other major cities, have started accepting cryptocurrencies as a form of payment:
- Restaurants and cafes: Establishments like 42Café in Vienna-Simmering and Delicious in Vienna accept Bitcoin and payments via the Bitcoin Lightning network.
- Hotels: Some hotels, such as kryptohotel.at, allow guests to pay for their stays using cryptocurrencies. Guests typically need to notify the hotel in advance.
- Transportation: Services like Ara's Bitcoin Taxi in Vienna and Klarkurs accept cryptocurrency payments for rides.
Tourism and Hospitality
The tourism sector in Austria has been particularly open to cryptocurrency adoption:
- AlpenParks Hotel and Apartment in Hochkoenig accepts Bitcoin payments.
- Bar and Restaurant Strandperle Seefeld in Tyrol allows customers to pay with cryptocurrencies.
ATMs and Easy Access
Austria has a relatively high number of cryptocurrency ATMs, with 119 reported across the country. This infrastructure makes it easier for both residents and tourists to access and use cryptocurrencies.
Investment and Trading
Platforms like Bitpanda, an Austrian cryptocurrency exchange, have gained popularity for cryptocurrency investment and trading. The company reported €600 million in transactions in 2017, indicating significant interest in crypto investments among Austrians.
Education and Research
The Austrian government has supported blockchain research, including funding for the Research Institute for Cryptoeconomy at the University of Vienna. This indicates a growing interest in understanding and developing blockchain and cryptocurrency technologies.
Energy Sector
Wien Energie, Austria's largest energy supplier, has shown interest in blockchain technology and has explored its potential applications in energy trading and distribution.
Challenges to Crypto Adoption
Source: Envato
While Austria is making significant efforts to integrate cryptocurrencies into its financial system, several challenges remain.
Taxation Policies
Austria has introduced a 27.5% capital gains tax on cryptocurrencies, treating them similarly to stocks2. While this aims to legitimize and integrate cryptocurrencies into the financial system, it also imposes a significant tax burden on investors. This could discourage investment and trading activities, particularly among small investors.
The Finance Ministry stated that they are working to build trust and reduce prejudice towards new technologies by promoting equal treatment.
Technological Barriers
The adoption of cryptocurrencies requires a certain level of technological literacy. Many potential users may find the technology behind cryptocurrencies, such as blockchain, complex and intimidating. This can be a significant barrier to widespread adoption, especially among older generations or those less familiar with digital technologies.
Security Concerns
The security of cryptocurrency exchanges and wallets is a major concern. Incidents of hacking and fraud can undermine confidence in the safety of digital assets. Ensuring robust security measures and educating users about safe practices are essential to overcoming this challenge.
Potential Benefits of Crypto Adoption
Source: Envato
Cryptocurrency adoption in Austria offers numerous potential benefits that could significantly impact various sectors of the economy and society. Here are some of the key advantages:
Reduced Transaction Costs
Cryptocurrencies can lower transaction fees compared to traditional banking systems. This is particularly beneficial for international transactions, where fees and exchange rates can be high. Lower costs can encourage more cross-border trade and investment.
Efficient Payment Systems
Cryptocurrencies can streamline payment systems, making them faster and more efficient. This can benefit both consumers and businesses by reducing the time and complexity involved in processing payments. For example, smart contracts can automate and expedite transactions.
Cross-Border Transactions
Cryptocurrencies facilitate seamless cross-border transactions without the need for intermediaries. This can be particularly advantageous for businesses engaged in international trade, as it simplifies the process and reduces costs.
Support for Decentralized Finance (DeFi)
The rise of decentralized finance (DeFi) platforms, which operate on blockchain technology, can provide a wide range of financial services such as lending, borrowing, and trading without traditional intermediaries. This can democratize access to financial services and foster innovation in the financial sector.
Conclusion
Even though cryptocurrencies are not yet comprehensively regulated in Austria, the country is taking significant steps towards integrating them into the financial system.
Austria's supportive stance on blockchain technology, growing investment platforms, and increasing use cases for cryptocurrencies across various sectors point towards a future of broader adoption.
While challenges remain, such as regulatory uncertainty, public perception, and technological barriers, Austria's efforts to address these issues position the country to reap the potential benefits of crypto adoption, fostering financial inclusion, innovation, and economic growth.
