Sweden: Blockchain – Country Comparative Guides

As for blockchain technology in general, Sweden has not adopted any specific laws to regulate the use of cryptocurrencies or other crypto assets. However, laws of a more general nature may be applicable depending on the use and character of the crypto asset at hand.

From a financial regulatory perspective, the SFSA has not provided any conclusive guidance on the treatment of cryptocurrencies or crypto assets for the purposes of financial regulation. It has been indicated that a cryptocurrency or crypto assets may be treated as a currency if it constitutes a means of payment. The determination of whether a crypto asset meets the definition of a financial instrument and whether the services or activities provided should be treated as a regulated investment service or activity must be made on a case-by-case basis. According to the SFSA, this assessment should take into account, inter alia, how the cryptocurrencies are electronically registered, their transferability and whether they entail any rights or obligations on behalf of the holder and issuer respectively. However, due to the lack of guidance the classification of cryptocurrencies and other crypto assets are uncertain. The SFSA has issued a report stating that, depending on the design of the crypto asset, it may fall within the scope of the Electronic Money Act (2011:755), or the Financial Instruments Trading Act (SFS 1991:980), but most crypto assets are outside the scope of both. Authorisation may thus be required from the SFSA prior to conducting certain activities with crypto assets in Sweden. However, according to the SFSA the majority of crypto assets are not subject to their regulation.

Furthermore, the SFSA as well as certain EU regulators have recently issued public reports on consumers’ investments in cryptocurrencies, crypto assets and financial instruments related thereto, highlighting, inter alia, difficulties relating to valuing the crypto assets and the lack of adequate consumer protection regulation. In this context the SFSA has declared investments relating to cryptocurrencies unsuitable for most, if not all, consumers.

For AML purposes, business involving exchange of cryptocurrencies that is conducted professionally and not ancillary to the business is, in general, within the scope of the AML regulations. The applicability of the AML regulations to other businesses must be made on a case-by-case basis. Effective from 1 January 2020, EU’s Fifth Anti-Money Laundering Directive is implemented through, inter alia, amendments in the Certain Financial Operations Act (1996:1006). The Amendments bring all business involving exchange of cryptocurrencies as well as wallet providers within the scope of the AML regulations. It should be noted that the definition of exchange services in the Certain Financial Operations Act goes beyond the definition in the directive, as it also includes exchange services between different virtual currencies.

For income tax purposes, cryptocurrencies are generally not characterised as a currency. In a ruling regarding the classification of bitcoins (HFD 2018 ref. 72), the Supreme Administrative Court held that currency generally refers to a payment instrument issued and guaranteed by a central bank or similar institution of a state. Bitcoin lacks a formal publisher. Its value is not based on any claim on the issuer but is determined based on market availability and demand. A bitcoin is also not generally accepted as a means of payment. Against this background, a bitcoin cannot be regarded as a currency within the meaning of the income tax legislation. A sale of a bitcoin should therefore be taxed in accordance with the provisions for “other assets” in the income tax legislation, meaning that upon disposal, such as a sale or an exchange if used as payment for goods or services, capital gains are taxed as capital income at a rate of 30 per cent and capital losses are deductible with 70 per cent. The Swedish Tax Agency has in a statement held that the same applies for other equivalent cryptocurrencies.

If transactions in cryptocurrencies are carried out as a business or if a person carries out so-called “mining” of cryptocurrencies, the tax rules for business income or employment income (hobby) will also be relevant to consider.

For VAT purposes, the provision of exchange services relating to bitcoins has, however, been considered to fall within the scope of the VAT exemption for currency transactions based on the ECJ ruling C-264/14, Hedqvist (HFD 2016 ref. 6).

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