Will Cryptocurrencies Preserve Their Popularity in Greece? Expert Take

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Greek Prime Minister Alexis Tsipras hailed the Eurogroup debt deal for Greece during a televised exchange with President Prokopis Pavlopoulos, referring to a “historic” agreement that exceeded the expectations of the markets.

“June 21, 2018 will go down in history as a significant day in the history of the eurozone,” he said, noting that the agreement made Greece’s debt “sustainable.”

But what does this mean for cryptocurrency’s future in Greece?  The Greeks frantically turned to online trading platforms in search of  Bitcoin during the doldrums of debt crisis in 2015, when banks began shutting down and capital controls were put in place.  Will cryptocurrencies and its underlying blockchain technology find a place in the Greek economy going forward now that the debt crisis has been alleviated?

What the EU and Greek Government Says

The European Union (EU) and member state countries are putting technological innovation — including  cryptocurrencies and its underlying blockchain technology — into a strategic tool for income growth, national competitiveness and economic well-being.  

The High-Level Group of Innovators — which has several blockchain technologists on its board — advises the European Commission (EC) on supporting top-class innovators, entrepreneurs, small companies and scientists with bright ideas and the ambition to scale up internationally.   The EC in-turn has an initiative called  the EU Blockchain Observatory and Forum to help member states work collaboratively to integrate and consolidate views, analysis and visions, create a knowledge repository, accelerate innovation and identify priority use cases for blockchain technology.

So far, twenty-two out of twenty-eight EU member states including Greece have signed on to the EU Blockchain partnership to exchange experience and expertise in technical and regulatory fields and prepare for the launch of EU-wide blockchain applications across the Digital Single Market for the benefit of the public and private sectors.   Croatia, Cyprus, Denmark, Hungary, Italy and Romania have opted out.

On May 16th, the European Parliament Committee on Industry, Research and Energy passed a resolution outlining the benefits of adopting blockchain/distributed ledger technology (DLT).

The author of the resolution, Eva Kaili, the chair of the Science and Technology Options Assessment panel said “Blockchain and DLT in general have a strong disruptive element that will affect many sectors” including energy.   She called for “open-minded, progressive, and innovation-friendly regulation.”

The resolution states:

“A DLT-based infrastructure within and amongst the EU Institutions utilizing pan European public-sector blockchains could be the heart of a trusted transactional ecosystem.”

The resolution continues by addressing the fact that smart contracts are the backbone of DLT and calls for the EC to explore the technical aspects of legally enforcing them across the digital single market, which ensures the free movement of online information across European borders adding that among other applications, “DLT can transform and democratize the energy markets and allow households to produce environment-friendly energy and peer-to-peer exchange.”  

In Europe, because gas is more environmentally friendly and cleaner than oil, it is the one of the most important energy sources. Greece is important to EU’s gas energy source both from a gas pipeline distribution point of view as well as from a supply point of view. Via Cyprus, Greece controls portions of the East Mediterranean gas supply of over 122 trillion cubic feet.

With the aim of expanding economic cooperation and trade relations with the Eurasian Economic Commission which is a gas energy trading block, Greece signed a Joint Declaration on Cooperation agreement on June 24,  2017.  The good news is that, the EEC is as committed to blockchain technology and cryptocurrencies as the EU and Greece is.

What Greek academics say

Konstantinos Daskalakis, Cretan-born Massachusetts Institute of Technology Associate Professor of Electrical Engineering and Computer Science, called on his fellow Greeks to think both globally and locally, and said that the multiple economic and social dysfunctions in the country must be overcome by embracing technology and artificial intelligence (AI).  In terms of crypto-currencies like Bitcoin, “it is one of the most fascinating discoveries of the 21st century,” he said and that the underlying technology (blockchain) has a future and “is here to stay.”

To determine whether or not cryptocurrencies are here to stay, an international research team comprised of Theodore Panagiotidis at the University of Macedonia in Greece and Orestis Vravosinos at the Barcelona Graduate School of Economics in Spain analyzed a broad spectrum of data representing several years in the life of Bitcoin, to reach a deeper understanding of cryptocurrency’s value.

Here is what they had to say:  

“With Bitcoin and other cryptocurrencies, transactions are conducted free of taxation. We can’t be sure what the nature of those transactions are, but often cryptocurrencies are used to avoid taxes or duties, or to engage in illicit commerce.

If cryptocurrencies continue to grow and position themselves as systems that are beyond the influence of banks and the reach of government regulation, we can be sure that governments will enact national laws and take their share of the proceeds.

Many people believe that Bitcoin is going to replace the money we currently use, but we doubt it. That’s because the government will never allow it. Governments want the tax revenues, and they want control.  Bitcoin’s fate is therefore highly unpredictable and dependent on what governments will do in the future.”

What Greek tax professionals say about Greek cryptocurrency tax policy and laws

“Currently there is no regulatory framework and relevant procedure to tax income derived from crypto/ICO transactions or mining activity within the Greek tax legislation. However, this does not mean that such income cannot be taxed by the Greek Tax Authority” said Spyros Dimitriou, Lawyer / Senior Manager, Tax, KPMG in Greece.

“If cryptocurrency/ICO transactions or mining activity is characterized as business activity or capital gains then such business income would be taxed at 29% in case of companies. In case of individuals’ capital gains would be taxed at 15% and business activity including cryptocurrency/ICO transactions or mining activity would be taxed according to a graduated tax scale provided by the law (22% – 45%) he added.

Currently, Cyprus does not tax cryptocurrencies either.