What do parties think of crypto and blockchain?
The use of new technologies such as blockchain or artificial intelligence has been in the spotlight lately and gaining more acceptance from governments around the world.
On Sunday, Sept. 26, Germans voted in parliamentary elections that marked the end of Angela Merkel’s 16 years in office. Since 2005, Germany has experienced deep crises, but also unprecedented prosperity. Merkel’s departure creates a power vacuum, but it also creates the chance for a new beginning — with the crypto sector being no exception. But what might this new beginning look like, and what are German parties planning to do to help the crypto market and new technologies like blockchain?
Cointelegraph took a look at the election manifestos, searched for keywords like “cryptocurrencies,” “blockchain” or “digital euro” and asked the parties what they think about the regulation of the crypto market.
Social Democratic Party — 206 seats won
The relationship of the center-left Social Democratic Party (SDP) to cryptocurrencies can be explained briefly: The crypto market apparently plays no role for Germany’s largest political party, which boasts the most members. And such words as “Bitcoin” or “cryptocurrencies” seem to be forgotten by the party in its “Zukunftsprogramm” (English: Manifesto for the future), the title of the SPD’s election manifesto.
Only in one place is there a negative mention of private digital currencies such as Facebook’s project Diem or so-called stablecoins. Not even the digital euro appears in the SPD’s election document.
The “sister” parties CDU and CSU, known as the “Union” — 196 seats won
Until mid-2019, the center-right parties CDU/CSU were critical regarding cryptocurrencies, after which the party launched its blockchain strategy. In the opinion of the CDU/CSU, blockchain technology has great potential, and Germany is to become a global blockchain pioneer. 90% of the measures (40 out of 44) from its blockchain strategy have already been initiated, including such milestones as the opening of German law for digital securities. The Union wants to continue to push blockchain pilot projects.
On the topic of cryptocurrencies, the CDU/CSU calls for progressive yet responsible regulation and the tightening of Know Your Customer rules. The election manifesto states:
“Acquiring real estate by paying cash should only be possible by means of banks, which must first verify the identity of the buyer and the origin of the money as part of an existing business relationship; the same applies when exchanging cash for cryptocurrency and vice versa.”
Tokenized securities, on the other hand, are much more a focus for the CDU/CSU, and they are openly advocated by the party. The digital euro as a fast, simple and secure means of payment and as an alternative to cash seems to be important for the CDU/CSU, too — but according to the party, “one has to take cautious steps.”
Alliance 90/The Greens — 118 seats won
The Greens understand the importance of blockchain technology but want to keep this innovation under state control. According to Lisa Paus, the Greens’ spokesperson for financial policy, told Cointelegraph that cryptocurrencies bring risks such as “huge energy consumption, abuse by criminals and speculative exaggerations.” “Basically, as for all innovations in the financial sector, the same rules should apply here as for other classic financial products with regard to consumer protection, transparency and financial stability,” she said.
In principle, the Greens support the plans of the European Central Bank to create its own digital euro. According to Paus, the European Union needs its own infrastructure in the financial sector to secure its sovereignty as well as the international role of the euro. She said:
“It is important to us that a digital euro guarantees data and legal security for consumers and businesses and does not threaten financial stability. Through a digital euro, we can also counteract unjustified costs caused by oligopolies. However, a digital euro does not replace classic cash, but complements it.”
Like the SPD, the Greens reject private currencies or stablecoins. The party fears an erosion of state control over currency and, accordingly, wants to take decisive action against it.
The Green party’s election manifesto also intends to completely abolish tax exemptions for cryptocurrency investments held longer than one year.
Currently, Germany only taxes crypto or precious metals, such as gold or silver, if they’re sold within the same year they were bought. So, crypto traders who use digital assets for long-term financial investment and do not often relocate them can generate tax-free profits in Germany.
According to the Greens, it should not matter how long you hold — sooner or later, the state will want its cut.
Free Democratic Party — 92 seats won
In its election manifesto, the pro-free market Free Democratic Party (FDP) advocates a friendly policy toward cryptocurrencies. It says it wants to create an innovation-friendly legal framework for crypto assets and enable digital securities of all kinds.
“Clear standards can enable both the companies involved and the consumers to use blockchain more safely and thus contribute to a better adaptation of the technology,” Johannes Mellein, FDP’s press officer, told Cointelegraph. Per Mellein, regulation should not be too strict but act as a barrier to market entry.
The liberal FDP sees new opportunities in blockchain, especially in the energy sector or for financial services. According to the party, the emerging blockchain ecosystem could be one of the strongest game-changers in capital markets and in the fintech sector in the next 10 years.
According to Mellein, blockchain tech could further unlock previously illiquid assets for investment from the public.
For this reason, the FDP is calling for a transformation of the national and European legal framework. The FDP has also proposed so-called “digital freedom zones” in Germany. Such zones — also referred to as regulatory sandboxes — would free blockchain and crypto startups from regulations and oversight by the Federal Financial Supervisory Authority (BaFin) so that they can try out new concepts and prototypes.
As far as a digital euro is concerned, the FDP sees it as a fast and secure alternative to cash. However, according to the liberal party, the e-euro should not abolish or replace cash.
Alternative for Germany (AfD) — 83 seats won
Although some Alternative for Germany (AfD) politicians have publicly spoken out in favor of Bitcoin (BTC) and cryptocurrencies in the past, the topic finds no place in their current election manifesto “Germany. But normal.” The right-wing populist party has dropped only one sentence about a central bank digital currency, stating that it is strongly opposed to central bank currencies.
The right-wing populist party is only certain about one thing: Cash must be preserved at all costs. The AfD demands the permanent preservation of cash as a civil right and its anchoring in the Common Law.
The Left — 39 seats won
The Left wants to regulate digital payment systems more strongly, in general. In addition, the party sees the state monopoly on currency threatened by the privatization of money — first and foremost by corporations like Facebook and its plans for a complementary currency, Diem. But cryptocurrencies, of course, also do not conform to the leftist credo that money must be state-owned. The Left confirms this to Cointelegraph:
“Cryptocurrencies provide little benefit to society and have harmful side effects.”
Bitcoin didn’t finance our daily consumption, the Left explains, Bitcoin also wasn’t about sufficient value stability, and it wasn’t guaranteed to maintain or increase its value.
The Left, therefore, demands stricter regulation of cryptocurrencies and better financial consumer protections. In the Left’s opinion, the financial supervisory authority, BaFin, should regulate crypto trading “to protect investors from high losses.”
In addition, the Left is calling for a ban on crypto mining. The party told Cointelegraph that it still sees the generation of Bitcoin and cryptocurrencies as a waste of energy and resources:
“Bitcoin is also an environmental sow because mining consumes an extreme amount of electricity. Moreover, there is an urgent need for action to put a stop to money laundering with cryptocurrencies. Bitcoin is the darknet of finance.”
The crypto-critical party, however, is open to a digital euro. The Left even tried to get the digital euro on the agenda in the Bundestag during the last legislative period:
“We are in favor of a digital euro that is secure and innovative, but in no way replaces cash, only complements it. The digital euro would be as secure as cash, would enable its own level of data protection and would support the digitalisation of the economy, such as the aforementioned automation of processes.”
According to the leftist party, blockchain technology is an innovation with great potential, especially in process automation. However, as stated by the Left, it didn’t make sense to use blockchain to verify electricity-intensive accounting via decentralized computers, which is generally provided by banks without errors.
Summary: Stricter regulation expected
How the future government consisting of these six parties will approach the issue of regulating cryptocurrencies and blockchain technology remains to be seen.
Changes such as tighter KYC regulations and stricter regulation of the crypto-economy can be expected soon. After all, the parties agree on one point: Money laundering and terrorist financing should be fought against harder, and cryptocurrencies are still seen by many parties (except the FDP) as “dirty” money with a lack of control.
Private digital currencies such as Diem or stablecoins will also not find support from the German government because of the fear that they could undermine the state’s monopoly on money. Only the FDP refrains from ban rhetoric, but the SPD candidate for chancellor, Olaf Scholz, on the other hand, often pleaded against private cryptocurrencies.