German Case Law on Bitcoin and Crypto Assets

Federal Fiscal Court, judgment of 14 Feb 2023 – IX R 3/22: gains on cryptocurrencies are taxable

The Federal Fiscal Court (BFH) held that virtual currencies (currency tokens such as Bitcoin, Ether, Monero) are assets, and that gains from disposing of them within one year of acquisition are taxable private disposal transactions (sec. 23 (1) sent. 1 no. 2 EStG). There is no structural enforcement deficit preventing taxation. A token is also acquired by exchanging it for other cryptocurrencies; a conversion into euros is not required for taxability.

Practical relevance: every transfer for consideration – including crypto-to-crypto swaps and using crypto as means of payment – can be a taxable disposal. In gifts and inheritance cases, by contrast, the predecessor's acquisition data carry over (sec. 23 (1) sent. 3 EStG) – a central building block of succession planning.

Source: bundesfinanzhof.de

Federal Ministry of Finance, circular of 6 March 2025: income-tax treatment of crypto assets

The tax administration comprehensively updated its position on crypto assets: acquisition and disposal, swaps, staking, lending, airdrops and hard forks, as well as taxpayers' cooperation and documentation duties. The circular replaces its 2022 predecessor and binds the tax offices.

Practical relevance: anyone transferring crypto assets – by gift, sale or contribution to a company – should meet the documentation requirements (acquisition dates, prices, transaction history) from the outset. Notarial deeds contribute reliable evidence.

Source: bundesfinanzministerium.de

Court of Justice of the European Union, judgment of 22 Oct 2015 – C-264/14 (Skatteverket v Hedqvist): exchanging Bitcoin for conventional currency is exempt from VAT

A Swedish businessman planned to buy and sell Bitcoin against Swedish kronor through his own website, earning only the spread between his purchase and sale price, with no separate fees. Sweden's Supreme Administrative Court referred the VAT question to the Court of Justice. The Fifth Chamber answered in two steps. First, the exchange is a supply of services for consideration within the meaning of Art. 2(1)(c) of the VAT Directive – the spread is the consideration, even though it is never invoiced as a fee. Second, that supply is exempt under Art. 135(1)(e) of the Directive, which covers transactions concerning currency and bank notes and coins used as legal tender. The Court read the provision in the light of its purpose: the exemptions for financial transactions exist to avoid the difficulties of determining the taxable amount; excluding Bitcoin merely because it is not legal tender would deprive the exemption of effect precisely where those difficulties arise. What matters is therefore that the parties accept Bitcoin purely as an alternative means of payment and that the units serve no other purpose. The two neighbouring exemptions do not apply: not Art. 135(1)(d) (payments and transfers), and not Art. 135(1)(f), because Bitcoin is not a security conferring a property right in a legal entity.

Practical relevance: the judgment remains the European foundation for the VAT treatment of crypto assets, and the German tax administration has incorporated it into its VAT application decree (sec. 4.8.3 (3a) UStAE on sec. 4 no. 8 lit. b UStG). In practice: simply exchanging Bitcoin for euros, or paying with it, triggers no VAT – the decisive questions arise in income tax (see the Federal Fiscal Court decision above, IX R 3/22). Two limits matter for drafting. First, the exemption extends only as far as the token serves purely as a means of payment; units with a purpose of their own – utility tokens, or in-game currency, which the decree expressly excludes – need separate analysis. Second, the judgment concerns the exchange itself: custody, administration and intermediation services around crypto assets follow their own rules. For notarial deeds in which Bitcoin is agreed as the purchase price or consideration – for instance when buying real estate against crypto assets – this is a reliable starting point: the transfer of value itself is not burdened with VAT; what remains to be settled is the valuation date, the price source and the income-tax documentation.

Source: curia.europa.eu

Court of Justice of the European Union, judgment of 5 Mar 2026 – C-472/24 (Žaidimų valiuta): game gold is not Bitcoin – trading in-game currency is fully subject to VAT

A Lithuanian company bought the virtual currency (“gold”) of the online game “Runescape” from players for euros and resold it to other players, without accounting for VAT. Following a tax audit for 2020 to 2023 it was assessed retroactively. It relied on the Hedqvist judgment (above): game gold was a virtual currency like Bitcoin, so the exchange was exempt; alternatively it was a multi-purpose voucher, and in any event only the trading margin could be taxed. The Second Chamber disagreed. The exemption in Art. 135(1)(e) of the VAT Directive covers non-conventional currencies only if two cumulative conditions are met: the parties must accept them as an alternative means of payment, and they must serve no purpose other than as a means of payment. Game gold, by contrast, serves solely for use within the game and is not accepted outside it to acquire real goods or services; under the terms of use it does not even belong to the players. Nor is it a voucher within the meaning of Art. 30a of the Directive: the gold is itself part of the game and thus an electronic service consumed directly by the buyer – it does not merely confer a right to some other supply still to be determined. The taxable amount is therefore, under the general rule in Art. 73, the entire consideration, not just the difference between purchase and sale price.

Practical relevance: the judgment sharpens the line already drawn in Hedqvist and anticipated by the German tax administration in sec. 4.8.3 (3a) UStAE: only the exchange of units whose sole purpose is payment is exempt. What counts is the token's function, not whether it is called a “currency” or a “coin”. Nothing changes for Bitcoin. But anyone who trades, exchanges or agrees as consideration tokens with a use of their own – in-game currencies, in-app credits, utility tokens, NFTs – must expect VAT on the full price; margin taxation via the voucher rules is ruled out where the token itself is the service consumed. For notarial drafting this means: where a purchase, transfer or partnership agreement provides for the transfer of a crypto asset other than Bitcoin, its function belongs in the fact-finding, and the deed should state whether the agreed value includes VAT. Likewise, when valuing an estate or a gift that includes digital assets, it matters whether they are means of payment or usage rights granted by a platform operator – the latter may, under the operator's terms, not even be owned by the holder.

Source: curia.europa.eu

Higher Regional Court of Cologne, order of 26 June 2024 – 11 W 15/24: custodians must do everything reasonable to release crypto assets

A trustee had been ordered by final judgment to transfer substantial crypto assets from two escrow wallets to a new trustee and pleaded technical impossibility (lost private key). The court confirmed a coercive fine under sec. 888 of the Code of Civil Procedure: the debtor had not taken all reasonable measures – engaging specialised recovery providers and regulated custodians was, in particular, reasonable.

Practical relevance: whoever holds crypto assets for others – as trustee, custodian or executor – bears far-reaching duties of effort. Escrow and custody agreements should define access routes, key management and release mechanisms precisely from the start.

Source: nrwe.justiz.nrw.de

Higher Regional Court of Cologne, judgment of 13 Oct 2021 – 11 U 56/20: an ICO escrow agent must release custodied crypto assets once the trust agreement ends

A tax adviser held the crypto proceeds of a 2018 ICO (initial coin offering) in two wallets as escrow agent and, after falling out with the issuer, refused payment for years – invoking verification duties, unpaid fees and, latterly, technical problems. The court ordered release under sec. 667 of the Civil Code: once the escrow agreement was effectively terminated (here by a justified extraordinary termination, sec. 626), the release obligation fell due; a right of retention over the fee was ruled out by the very nature of an escrow relationship. Notably, release was owed not to the issuer itself but to the newly appointed escrow agent, because the buyer-objection procedure promised in the whitepaper had not yet been completed – and the agreed liability cap of EUR 1.5 million for negligence had to be pronounced in the operative part of the judgment itself. The utility tokens on offer were classified neither as securities nor as licensable deposit or e-money business.

Practical relevance: this judgment is the merits proceeding behind the 2024 coercive-fine order discussed above – together they show the full life cycle of a failed crypto escrow, from termination to enforcement. Anyone structuring escrow arrangements over crypto assets should regulate payout conditions, evidence and notification duties, fee security and liability caps expressly and consistently – it was precisely the interplay of whitepaper, escrow agreement and standard terms that fuelled years of litigation here.

Source: nrwe.justiz.nrw.de

Higher Regional Court of Düsseldorf, order of 19 Jan 2021 – I-7 W 44/20: a claim to the transfer of Bitcoin can be enforced by substitute performance

A debtor had been ordered by default judgment to transfer 0.9 Bitcoin to a precisely designated wallet address of the creditor – and failed to perform. The regional court considered the obligation non-substitutable (sec. 888 Code of Civil Procedure) because only the debtor knows his private key. The Düsseldorf court disagreed and authorised the creditor to procure substitute performance under sec. 887: since the judgment did not require the coins to come from a wallet of the debtor, the creditor may acquire the owed quantity on the market – much like a lender of fungibles owed crypto assets "of the same kind, quality and quantity" – and have it transferred; the debtor must advance the costs (here around EUR 7,000). Economically it is irrelevant to the creditor who effects the credit to his wallet.

Practical relevance: together with the Cologne decision (above), this maps out crypto enforcement: where the judgment is for a generic quantity ("0.9 BTC to wallet X"), the creditor can ultimately have it performed at the debtor's expense; where specific coins accessible only to the debtor must be released, coercive fines and detention remain the only route. For contract drafting – including notarial deeds – this means: define crypto performance obligations precisely (quantity, recipient wallet, procurement rights) so that the more effective enforcement route remains open in a dispute.

Source: nrwe.justiz.nrw.de

Higher Regional Court of Frankfurt am Main, judgment of 19 Sep 2025 – 7 U 80/24: a legal expenses insurer is bound by the arbitrating opinion – cover for an action over an alleged wallet defect

A policyholder had bought a hardware wallet for EUR 59.90 in December 2020 and stored 15.894 bitcoin on it. A few weeks later he found that the access credentials held on the device had been transferred to another device and that the coins had been sold via a trading platform; he put his loss at EUR 769,011.19. His legal expenses insurer refused cover for the intended action against the seller – no defect had been coherently pleaded and the action had no prospects of success – while pointing out the option of an arbitrating opinion by his own lawyer ("Stichentscheid"). That opinion was produced over fourteen pages; the insurer nonetheless maintained its refusal. The Frankfurt court held the insurer bound by it: under sec. 18 of the applicable policy conditions (ARB 2000), the binding effect falls away only where the opinion deviates substantially from the true factual and legal position. No further duty of neutrality can be read into the clause – the parties deliberately entrust the decision to the policyholder's own lawyer, who is required by professional rules to represent that client's interests (sec. 3 (1) Federal Lawyers' Act, sec. 1 (3) Professional Code); only a grossly improper opinion would lose its binding force. Nor is the opinion a comprehensive legal expert report: it need only address the grounds given in the refusal letter, while the insurer is barred from advancing fresh grounds later in the coverage proceedings. The senate declared cover owed for the equivalent value of the 15.894 bitcoin – not merely for the purchase price of the device – and awarded the EUR 2,306.82 cost of the opinion. Leave to appeal on points of law was refused; proceedings are pending before the Federal Court of Justice under IV ZR 212/25. The alleged defect itself has thus not been decided: the case concerned cover alone.

Practical relevance: for holders of crypto assets this is the economically decisive juncture – the amount in dispute follows the value of the lost coins, not the purchase price of the hardware, and without a coverage commitment such an action is barely feasible in practice. A refusal letter should therefore not be accepted unchecked: the arbitrating opinion is an effective instrument, payable by the insurer, and the insurer must put all its objections on the table at once. Two consequences for structuring: anyone holding crypto assets in self-custody should document acquisition, holdings and transaction history in an evidentially robust way from the outset – in litigation against a manufacturer or seller, the burden of pleading and proof decides the case. And anyone taking custody for others – as trustee, executor or as part of a succession arrangement – should settle who pursues which claims in the event of loss, and how they are funded.

Source: lareda.hessenrecht.hessen.de

Federal Labour Court (BAG), judgment of 16 Apr 2025 – 10 AZR 80/24: commission paid in Ether can be a benefit in kind – but the attachment-exempt part of the wage remains owed in money

An employee of a crypto company had agreed with her employer that her commissions would be calculated in euros but settled in Ether (ETH), converted at the “current exchange rate” on the due date, the last day of the following month. Commissions for February and March 2020 remained outstanding; the ETH were never transferred, and in December 2021 the employer made a payment in euros instead. The Federal Labour Court held that transferring a cryptocurrency can indeed constitute a benefit in kind within the meaning of section 107(2) sentence 1 of the German Trade Regulation Act (GewO), provided it serves the employee’s objective interest – affirmed here because she worked in the sector, was familiar with such transfers, and the prospect of price gains offered a particular benefit. The limit, however, is set by section 107(2) sentence 5 GewO: the attachment-exempt part of the wage must be paid in money, and the value of the benefit in kind may not exceed the attachable part. Because the Regional Labour Court of Baden-Württemberg (judgment of 10 Apr 2024 – 19 Sa 29/23) had miscalculated the attachment thresholds – among other things without applying the increase for additional earnings under section 850c of the Code of Civil Procedure – the Tenth Senate set the appeal judgment aside and remitted the case.

Practical relevance: this is the first confirmation at the highest instance that crypto assets can serve as valid consideration in a continuing obligation – and at the same time it shows where mandatory protective law cuts a crypto clause short. Three consequences for structuring. First, any arrangement providing for recurring performance in crypto assets needs a quantified monetary floor: where the law requires a minimum amount in money, the crypto clause operates only on the surplus. Second, the conversion mechanism is the real source of dispute – “current exchange rate” will not do; the reference date and time, the price source and a fallback if that source fails should be spelled out, because the value can move considerably between the claim arising and its settlement. Third, the reasoning carries over to notarial arrangements promising recurring performance – maintenance or support obligations in a transfer agreement or marital contract, for instance: there, too, mandatory rules limit settlement in crypto assets, which is why a crypto component is best agreed alongside, not instead of, the monetary obligation owed.

Source: bundesarbeitsgericht.de

Frankfurt am Main Higher Regional Court (OLG), judgment of 19 Apr 2023 – 13 U 82/22: someone who invests another person’s money in crypto assets as a favour is not liable for price losses if given a “free hand”

In 2017 two close friends agreed that one of them – experienced with crypto assets – would invest the other’s savings; free of charge, as a favour. The investor transferred a total of EUR 84,061; ether and bitcoin were acquired with it, and by early October 2017 the holding stood at roughly 309 ether, held in a trading account belonging to the helper. In November 2017 the helper exchanged part of it back into bitcoin, speculating on a rise. The rise did not come, while ether went up – the reverse exchange yielded less than before. The investor claimed the difference of about 116.5 ether as lost profit. The Regional Court of Darmstadt largely upheld the claim; the Frankfurt Higher Regional Court dismissed it in full. The senate worked through the possible bases of claim: tort claims under section 823 of the Civil Code (BGB) are ruled out because crypto assets are neither absolute nor other rights within the meaning of that provision; nor did the case involve the usurpation of another’s affairs (section 687(2) BGB) relied on by the lower court, since the helper was plainly conducting someone else’s business. What remained was benevolent intervention in another’s affairs (sections 677, 678, 280(1), 282 BGB). The decisive question was therefore whether the exchange ran counter to the principal’s actual or presumed intention – and whether the helper had to recognise this. No contrary intention had ever been expressed. As to presumed intention, the hearing of both parties suggested rather the opposite: the investor had no expertise of his own, had not committed to any particular currency, had approved exchanges between ether and bitcoin from the outset, and specifically wanted profits from risky trading – which he obtained. Since the claimant bears the burden of pleading and proof for the breach of duty, the remaining uncertainty led to the claim being dismissed in its entirety. The senate added that the claim was in any event contrary to good faith (section 242 BGB), because the investor had nearly quadrupled his stake overall. Leave to appeal was refused; the Federal Court of Justice rejected the complaint against that refusal on 26 September 2024 (III ZR 108/23), so the judgment is final.

Practical relevance: the case describes an everyday situation that comes up often in advice: a technically adept relative or friend manages someone else’s crypto assets – no contract, no fee, and frequently in an account of their own. Two lessons follow. For the helper: without a mandate, the rules on benevolent intervention apply; the standard of liability turns on what the principal would have wanted, and anyone plainly given a “free hand” is not liable for every misjudged speculation. For the person providing the capital: that freedom is his risk – he must prove his case, and years later that is practically impossible if nothing was recorded in writing. From a notarial perspective a third point matters: the senate expressly confirms that crypto assets are not tangible objects within the meaning of section 90 BGB, so neither a transfer of title under sections 929 et seq. BGB nor a claim for restitution under section 985 BGB is available – what is owed is the “transfer” of a quantity to a specified address (as already held by the Düsseldorf Higher Regional Court, above). Anyone holding crypto assets for others – as a family member, holder of a lasting power of attorney, trustee or executor – should therefore record in writing the scope of authority, investment limits, documentation and accounting; in a power of attorney or a will this takes only a few sentences. And the arrangement chosen here – holding another person’s assets in one’s own account – is to be avoided: it clouds attribution in succession, insolvency and tax matters and can quickly turn a favour into years of litigation.

Source: lareda.hessenrecht.hessen.de

Bavarian Supreme Regional Court (BayObLG), order of 13 Nov 2024 – 102 AR 119/24 e: anyone who buys and manages bitcoin for another person for a fee is sued in contract – this does not create jurisdiction at the investor’s place of residence

In 2017 a woman living in Munich agreed with the son of her mother’s friend, an investment banker, that for a set-up fee of 250 euros he would buy bitcoin worth 7,000 euros for her and receive a 10 % share of the gain if the value doubled; he signed the agreement in Vienna. He acquired 0.656 bitcoin. When the investor wanted to sell in 2021, he stated that he no longer had any bitcoin – as agreed, he said, he had traded the money in his own portfolio together with other crypto assets and lost it in a market crash; she regarded this as misappropriation. After two payments totalling 11,000 euros she sued for the remaining approx. 23,500 euros before the Munich I Regional Court, relying on tort for jurisdiction: the financial loss, she argued, had occurred at her place of residence. The Regional Court referred the case to the Berlin Regional Court, where the defendant supposedly lived according to the statement of claim; that court likewise declined jurisdiction – the defendant had meanwhile given an address in Kitzbühel. The Bavarian Supreme Regional Court held the Munich referral to be objectively arbitrary and therefore not binding: it gave no tenable basis for jurisdiction in Berlin, assumed a Berlin residence without any examination and overlooked that section 32 ZPO is not excluded merely because contractual breaches are alleged as well. The senate nevertheless did not designate a competent court but returned the case to the Munich I Regional Court for further fact-finding – because even the international jurisdiction of the German courts is open. It gave clear guidance on this: whether the defendant is domiciled in Germany (Art. 4 Brussels Ia Regulation) is to be determined under sections 7 et seq. BGB; a profile on a career network listing Berlin positions and a German mobile number are indications of this, deregistration to another country points the other way. An arrangement to acquire and manage bitcoin for remuneration is a paid management of another’s affairs and thus a contract for the provision of services within the meaning of Art. 7(1)(b) Brussels Ia Regulation – what matters is where the service was to be provided. The senate rejected jurisdiction in tort under Art. 7(2): whether the defendant was allowed to exchange the coins into other crypto assets can only be answered by reference to the agreement, so the claim is contractual in this respect too. And there is no consumer jurisdiction (Arts. 17, 18 Brussels Ia Regulation) where a private individual invests as a favour within a circle of acquaintances – not even if he is an investment banker by profession.

Practical relevance: the decision is the procedural counterpart to the Frankfurt favour case (above) and arises from the same everyday situation: a knowledgeable acquaintance buys and holds crypto assets for someone else. There, the absence of remuneration determined the standard of liability; here, even a small flat fee turns the arrangement into a paid management of affairs – with consequences for where a claim can be brought at all. Anyone who wants to be able to sue in Germany if a dispute arises should not leave this to the chance of where the other side later lives: if one party lives abroad or may move there, a choice-of-court agreement (Art. 25 Brussels Ia Regulation), a choice of law and the place of performance belong in the agreement. Equally important is the question of authority, on which the senate even bases jurisdiction: may the manager only buy and hold, or also reallocate, mix with his own holdings and speculate? Recording this in writing determines liability, jurisdiction and the evidential position at the same time. The same applies in succession and incapacity planning – executors and attorneys managing crypto assets should also know what powers they have and where they may be sued if necessary.

Source: gesetze-bayern.de

Berlin Court of Appeal (Kammergericht), judgment of 7 Jan 2022 – 21 U 1037/20: an investment paid for in ether and bitcoin has no place of damage – the applicable law follows the contract documents, and technical execution alone does not make a liable “person behind the scenes”

In December 2017 and January 2018 an investor living in Poland subscribed, in an initial coin offering, for tokens of a Swiss stock corporation that intended to mine cryptocurrencies in container-based data centres with its own cooling technology. The tokens embodied uncertificated profit participation rights governed by German law; payment was made almost entirely in ether, with a small remainder in bitcoin. The project collapsed after a falling-out between the founders and the board of directors, and the issuer went bankrupt. The investor sued not the issuer but a Berlin GmbH that had technically executed the token sale, placed advertising, helped draft the profit-participation section of the prospectus through its lawyers and later held both private keys to the smart contract; at least six million euros of investor funds were still sitting in its wallet. The allegation was that the GmbH had been the “person behind the scenes” concealed in the prospectus and the de facto manager. The Berlin Regional Court ordered the GmbH to pay 438,765 euros; the Court of Appeal dismissed the claim, did not grant leave to appeal, and the Federal Court of Justice rejected the complaint against that refusal on 9 July 2024 (XI ZR 345/22). The senate first determined the applicable law under the Rome II Regulation and in doing so set two markers that reach beyond the case. A payment in cryptocurrency has no place of damage: the blockchain is kept in multiple copies on computers distributed around the world, a wallet is not an account with a bank established in a particular state, and the claimant had not even stated where his wallet was located. Nor can a market place be identified where tokens are offered in numerous states and are generated and transferred by a smart contract that likewise cannot be localised. The decisive factor was therefore the escape clause of the manifestly closer connection: the profit participation right, the core of the model, was governed by German law, the subscription agreement contained a choice of German law, issuer and investor had agreed on a German forum, and all parties except the issuer were based in Germany. A later version of the prospectus which provided for Swiss law to govern the prospectus and referred to a “clause M” that did not exist in the contract had not yet come into existence at the time of subscription and was therefore not agreed. On the merits, the senate then denied that the GmbH was a person behind the scenes: what matters is a determining influence on the company when the project was initiated, not a role taken on later. The GmbH was never a majority shareholder, acquired a 31 per cent stake only after the token sale, and neither its contribution to the prospectus nor the technical execution nor the intended shareholding under a convertible loan was sufficient. Moreover, there was no prospectus error: a person behind the scenes needs to be disclosed only where material capital or personal interlinkages or conflicts of interest are added – such a person is not liable merely because the reference to him is missing. The statement that a patent had been applied for was correct. Finally, the investor had himself rebutted the presumption that a prospectus error had caused his decision when he was heard in person: he had relied on recommendations by third parties, had bought the ether before the prospectus appeared and had shown no interest in the persons involved. Tort claims failed because no responsible individual was named and no loss from the alleged misappropriation was substantiated. Another senate of the Court of Appeal had regarded the same GmbH as a person behind the scenes in parallel proceedings (20 U 1088/20); the 21st senate left open whether it agreed, because its decision also rested on the absence of prospectus errors and the lack of causation.

Practical relevance: the decision exposes a gap in private international law that affects every crypto investment with a cross-border element: anyone paying in ether or bitcoin has neither an account in one place nor a market in one place – the connecting factors by which the conflict of laws otherwise identifies the applicable law come to nothing. The court therefore had to rely on the contract documents. The first drafting rule follows from this: every agreement on crypto assets involving persons or companies from different states should contain an express choice of law and a choice-of-court clause – worded identically in all versions of the documents. The case shows how a subsequently amended prospectus with a contradictory choice of law and a reference to a non-existent clause becomes the subject of litigation. The same finding applies to succession: crypto assets have no situs, so that where there is a foreign element the law of succession alone – the deceased’s habitual residence or a choice of law under the European Succession Regulation – determines under which law they pass; anyone with assets in several states should make that choice expressly in a notarial will. The second lesson concerns custody. The defendant GmbH held both private keys to the smart contract and thus actual access to millions, although the prospectus did not provide for this – in the senate’s view a role that arose only after the sale and does not trigger prospectus liability. For investors this is the sobering side: whoever holds the keys controls the assets, and liability for this is governed by contract and tort law, not by the prospectus. Anyone who holds crypto assets for others or has them held – as a service provider, trustee, executor or attorney – should therefore distribute control of the keys from the outset so that no single party can dispose of the assets alone, and should set out the powers in writing; the multi-signature arrangement we recommend for estate planning is precisely the technical answer to this situation. Thirdly, the judgment is a reminder that the presumption that a prospectus error determined the investment decision can be overturned by the investor’s own testimony. Anyone who makes an investment conditional on specific assurances – choice of law, patent protection, supervision, use of funds – should record those expectations before subscribing rather than reconstruct them years later in the courtroom.

Source: gesetze.berlin.de

Berlin Court of Appeal (Kammergericht), judgment of 25 Sep 2018 – (4) 161 Ss 28/18 (35/18): Bitcoin was not a financial instrument under the former KWG

The Kammergericht acquitted the operator of a bitcoin trading platform of conducting unlicensed banking business: bitcoin was neither a unit of account under the Banking Act (KWG) nor e-money under the Payment Services Act (ZAG); the supervisory authority's contrary practice exceeded the limits of permissible interpretation in criminal law.

Practical relevance: the decision marks the starting point of today's regulation – the legislature responded: since 2020, crypto assets are covered by the KWG and crypto custody is a licensable financial service (sec. 1 (1a) sent. 2 no. 6 KWG); since the end of 2024, the European MiCAR regulation applies in addition. For incorporations in the crypto sector, regulatory classification is now a central structuring issue.

Reference: dejure.org

Hamburg Higher Regional Court (OLG), judgment of 6 Jun 2024 – 5 U 64/23 (“crypto currency portal”): a website merely also available in German does not yet make a foreign crypto platform subject to licensing

A company based in Singapore operated an internet platform on which users could acquire crypto assets and lock them up for fixed periods in products such as “lending” and “freezer”. It held no licence under the German Banking Act (KWG); on 7 January 2022 the supervisory authority BaFin announced publicly that it was investigating a suspicion of unlicensed banking or financial services business. The same day, the operator of a crypto information portal published a video presenting it as established fact that the platform was not permitted to operate in Germany or to offer financial services there, yet was doing so anyway. The Hanseatic Higher Regional Court prohibited that statement. The decisive point was the preliminary supervisory question: under section 32(1) KWG, a licence is required only by those who conduct banking business or provide financial services within Germany. In purely cross-border internet business without any physical presence, what matters is whether the provider targets the German market – for instance through tailoring to German needs and legal conditions, a German internet address, direct approaches to domestic customers, or the involvement of domestic institutions. The fact that the site was also available in German, and that Germany did not appear on the list of excluded countries, was not enough for the senate. Since no licensing requirement could therefore be established, the assertion of unlicensed activity remained unproven; whoever makes such an assertion bears the risk that the truth cannot be clarified (section 4 no. 2 of the Unfair Competition Act). A mere announcement of suspicion by the regulator must not be presented as a finding.

Practical relevance: for clients with a cross-border element, the decision settles a frequently asked question: a German-language offering alone does not trigger a licensing requirement under section 32 KWG. That is no all-clear, however – the connecting factors listed by the senate show how quickly the threshold of “targeted” market activity is crossed, and for crypto assets the framework has shifted anyway since the period at issue: crypto custody has required a licence since 2020, and the European MiCAR regulation, with its own authorisation and passporting rules, has applied since the end of 2024. Anyone incorporating or restructuring a company in the crypto sector should therefore clarify the supervisory classification before notarisation and choose a corporate purpose in the articles that does not inadvertently cover licensable activities. Second, the decision is a caution about communication: pending supervisory proceedings are suspicions, not findings; presenting them as results – in reviews, newsletters or videos alike – gives rise to liability for injunctive relief and damages. For notaries this follows in any event from their duty of objectivity: they may report on a party’s regulatory position only as far as it is established.

Source: landesrecht-hamburg.de

Nuremberg-Fürth Regional Court (LG), order of 23 Feb 2026 – 12 Qs 46/25: a darknet past of bitcoin alone does not justify an asset freeze for reckless money laundering

Between 2022 and 2023 a crypto trader received bitcoin worth more than one million euros via the trading platform bitcoin.de. The blockchain analysis software of the bank operating the platform raised alerts: most of the coins could be traced – through many intermediate steps – back to the darknet marketplace “Silk Road”, which until October 2013 dealt mainly in drugs and weapons. The public prosecutor then opened proceedings against the entire family for reckless money laundering. Through the trader’s daughter, who exchanged coins into euros, EUR 10,000 reached her husband; the roughly EUR 7,840 still in his account were secured by an asset freeze order. On his complaint, the Regional Court set the freeze aside. An order under section 111e of the Code of Criminal Procedure (StPO) requires an initial suspicion, which here had to be a double one: it must relate both to the money laundering and to a qualifying predicate offence. That was lacking. Between Silk Road and the trader’s wallets lay around nine years and, depending on the route, 5 to 37 transaction steps (“hops”). The chamber considered the mere fact that bitcoin had at some point been used for payments on a darknet marketplace to carry little weight – more than nine million bitcoin are said to have passed through Silk Road alone, and a large share of all bitcoin has probably moved through such platforms at some time; since bitcoin is also a recognised means of payment in lawful commerce, restraint is called for before assuming recklessness. Transitional law added a further hurdle: the first transaction steps took place in 2013 and 2014 and fall to be assessed under the former section 261 of the Criminal Code (StGB), with its exhaustive catalogue of predicate offences, as the more lenient law; there was nothing to show that the coins derived from a catalogue offence. Nor could the extended independent confiscation relied on in the alternative (section 76a(4) StGB) support the freeze, because it requires proceedings for intentional money laundering, whereas the investigation here concerned recklessness only.

Practical relevance: the decision addresses a concern shared by many holders of older bitcoin: analysis tools used by exchanges and banks flag coins whose history shows darknet contact years back – leading to suspicious activity reports, frozen accounts and investigations. The chamber makes clear that such a “tainted” history does not by itself justify a freeze; the authorities must set out a concrete predicate offence capable of supporting money laundering. That is no all-clear, however: this is a regional court ruling in complaint proceedings, the investigation continued, and a suspicious activity report and freeze alone can block assets for months. For notarial practice one point stands out: evidence of provenance is part of every crypto arrangement. Anyone giving, bequeathing, contributing to a company or using crypto assets as consideration should document the acquisition route, date, trading venue and transaction history without gaps – records that also serve the anti-money-laundering duties of the parties and the notary (sections 10 et seq. and 43 of the Money Laundering Act, GwG) and, in a succession case, prove the source of funds for the heirs. This applies especially to holdings from bitcoin’s early years, where hardly anyone today can explain the chain back to the origin.

Source: gesetze-bayern.de

Hanau Regional Court (LG), order of 15 Apr 2025 – 1 Qs 10/25: seized crypto assets may be sold early because of price volatility

During a search of a suspect – the mother of a man previously sentenced to seven years for drug offences – officers seized cash and three Ledger sticks holding mainly XRP (Ripple) and ADA (Cardano) worth around EUR 13,769. To secure the state’s confiscation claim, Hanau Local Court ordered their seizure (sections 111b, 111j of the Code of Criminal Procedure, StPO, together with section 73 of the Criminal Code, StGB); the public prosecutor announced an emergency sale under section 111p StPO. The convicted son objected: no loss in value was imminent, he argued, and prices would “continue to rise enormously”. The Regional Court dismissed his complaint. An emergency sale requires that a substantial loss in value be imminent – substantial from around 10 per cent – and the test is whether an economically minded owner would decide to sell. The chamber answered yes for crypto assets: even though substantial gains are equally possible, that does nothing to change the fact that falls of more than 10 per cent can occur suddenly and unexpectedly. Unlike food, vehicles or land, crypto assets are not yet governed by settled empirical experience; no expert had to be appointed, because the volatility is a matter of judicial notice. The organisational reasoning is notable: prosecution authorities have no “trading desk” and cannot monitor the market continuously in order to pick the best moment to realise the assets; any other view would create administrative burden and liability risks. The emergency sale, as a “special sacrifice”, is a proportionate balance between the constitutional guarantee of property (Article 14 of the Basic Law) and the criminal-law interference. The order is not open to appeal.

Practical relevance: for holders of crypto assets this is an uncomfortable but clear message. Where crypto assets are seized in an investigation, the state may convert them into euros promptly – and precisely on the ground that their price fluctuates. Anything later returned is returned in money at the sale proceeds; a subsequent rally no longer benefits the person concerned, even if the suspicion is not borne out. Two consequences matter for notarial practice. First, documenting provenance protects before matters reach that stage: anyone who can show the acquisition route, date, trading venue and transaction history without gaps can rebut an initial suspicion early – which applies equally to gifts, succession, contributions in kind and purchase price arrangements, and at the same time serves the duties under sections 10 et seq. and 43 of the Money Laundering Act (GwG) (see also the Nuremberg-Fürth decision above). Second, anyone holding crypto assets for others – as trustee, attorney under a power of attorney or executor – should expect that an investigation against one party may capture the entire holding in custody; keeping holdings properly separate and allocating them clearly in the deed makes it easier to keep one’s own assets out of reach. And for arrangements in which crypto assets are promised as performance, the case again shows that values can shift considerably between agreement and performance – the reference date, the price source and a fallback procedure belong in the wording.

Source: lareda.hessenrecht.hessen.de

Cologne Tax Court, judgment of 10 Sep 2025 – 3 K 194/23: income from crypto-lending is taxed at the personal rate

For the first time, a tax court has classified income from so-called crypto-lending – the compensated, temporary provision of Bitcoin to other users via a platform: it is miscellaneous income within the meaning of sec. 22 no. 3 EStG, taxable at the personal rate, and not capital income subject to the flat-rate withholding tax. Bitcoin does not embody a claim directed at money, so there is no capital claim within the meaning of sec. 20 EStG.

Practical relevance: the decision shows how differentiated the taxation of individual crypto uses has become. It is not final; the appeal is pending before the Federal Fiscal Court under VIII R 23/25. The further development is also of interest for the planned reorganisation of crypto taxation.

Source: press release justiz.nrw.de

Nuremberg Tax Court, judgment of 22 Jan 2025 – 3 K 760/22: crypto assets are taxable assets, and swaps are taxable too

The Nuremberg Tax Court confirmed the Federal Fiscal Court's line on the merits: Bitcoin, Ether and comparable units meet the requirements of "other assets" within sec. 23 (1) sent. 1 no. 2 EStG, provided they are transferable, marketable and market-valued. Taxation of realised gains from swap transactions does not require conversion into legal tender ("cashing out") – what matters is the realisation of an economic advantage.

Practical relevance: swapping one cryptocurrency for another can also be a taxable private disposal within the one-year period. This is an important consideration for documenting acquisitions – including in the context of notarial transfers.

Reference: gesetze-bayern.de (BeckRS 2025, 7241)

Crypto-Asset Tax Transparency Act (KStTG) – in force since 1 January 2026

The KStTG implements the European DAC8 directive: providers of crypto-asset services (exchanges, custodians) collect and report transaction and personal data of their users to the tax authorities. The first transmission is scheduled for 2027 (for data from 2026). This ends the effective opacity of crypto transactions towards the tax administration.

Practical relevance: evidentiary documentation of acquisition date, cost and origin of holdings becomes mandatory practice – not least to avoid unfavourable estimates. Notarial deeds on acquisition and transfer make a robust contribution.

Source: gesetze-im-internet.de

Planned: abolition of the one-year holding period from 2027 (legislative project)

The German government plans to abolish the one-year holding period of sec. 23 EStG for private crypto assets and to tax crypto gains in future regardless of the holding period (allocation to income from capital assets, flat-rate withholding tax). Planned entry into force: 1 January 2027. This is a legislative project, not yet applicable law – the parliamentary process and key details (grandfathering, loss offsetting) are open. The government tax bills of 14 August 2026 (Annual Tax Act 2026, Budget Accompanying Act 2027) do not yet contain the provision.

Practical relevance: until promulgation, current law applies. In detail in the article Bitcoin and tax: the end of the holding period from 2027.