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6.92 Rather Enabling Environment
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Denmark wants to be at the forefront of blockchain revolution in the European Union and globally despite obvious lagging behind leading nations in this sphere both in political decisions, legislative acts and regulative practices. Danish experts see the country's blockchain potential in public sector (especially on the municipal level), foreign aid, setting standards for blockchain applications, selected industries (f.ex., shipping) and democratic procedures.
There is a distinct difference in Danish attitudes to blockchain on one hand and cryptocurrencies (esp. Bitcoins) on the other. The first is mostly admired, the latter – mostly feared. Regulative activities of the state in relation to Bitcoins started in Denmark not earlier than 2013. The Regulation is rather fragmentary and mostly favourable for blockchain activities and sometimes cryptocurrencies as well.
In 2014 the Tax Council ruled that Bitcoins is not covered by the Capital Gain Act, but the State Tax Act. This means that winnings on Bitcoins should not be taxed unless the taxpayer deliberately practices speculation purchasing and selling Bitcoins. In 2016 the Tax Authority discussed cryptocurrencies in relation to value-added tax (VAT) and found that cryptocurrencies are exempt from VAT. In 2017 the Danish Central Bank issued warnings against the use of bitcoin and finally rejected a national Danish crypto currency after playing with the idea for some time.
Neutral Political Environment
Blockchain and cryptocurrencies despite continuing hype in the Danish media are not yet at the top of political agenda. Neither leading politicians, nor the Government or the Parliament have adopted laws and binding decisions on the subject or made official statements (with notable exception of Foreign Ministry, Ministry for Development Cooperation and Ministry for Industry, Business, and Financial Affairs). Blockchain and cryptocurrencies are regarded as the domain of Financial Supervision Authority (Finanstilsynet), the Central Bank of Denmark and various expert bodies as well as educational and business institutions, both public and private. At least one important expert body – the SIRI commission recently (June 2018) called on the Government and the Danish association of municipal bodies (KL – Kommunernes Landsforening) to take as soon as possible a pro-active position in relation to blockchain and cryptocurrencies and stimulate/ regulate Denmark's development in this sphere.
Neutral Legal Environment
Regulatory Convergence Denmark has no laws specifically addressing cryptocurrencies, and no regulatory proposals on cryptocurrencies are pending in the Danish Parliament. However, government agencies have issued a number of statements on cryptocurrencies. The four Danish governmental bodies, which now are supervising cryptocurrencies (mostly) and blockchain (to a lesser extent) are the Danish FSA (Finanstilsynet), the Tax Council, SKAT (Danish taxation agency) and the Danish Central Bank. The declared legal positions of the 4 bodies cover very few aspects of cryptocurrencies use. Insofar they have not contradicted each other.
Definiteness of Legal Regulation Cryptocurrencies and ICOs in most cases of their use are not regulated, no special laws exist in Denmark. In some cases, existing laws and norms are applied to regulate cryptocurrencies and ICOs; decisions to do so are taken by the Danish FSA, the Tax Council or SKAT on the ad hoc basis. The status of cryptocurrencies and ICOs is defined in very broad terms in statements of the FSA and the Tax Council and is always subject to case by case assessment by these bodies. Thus the status may be characterized as largely undefined.
Stability of Legal Regulation It is highly probable that in the middle term Danish legislation and regulative practices regarding blockchain and cryptocurrencies will change and cover this sphere (at least in part) by specifically adopted laws and normative acts.
Adequacy of Legal Regulation Legislation and legal practices are quite neutral in relation to blockchain and cryptocurrencies. There is no specific legislation whatsoever. Legal practices are based on existing laws applicable in specific cases. There is no indication of possible negative attitude of state regulators toward cryptocurrencies or blockchain.
Situation with the Rule of Law Denmark has the highest Rule of Law Index (alongside Norway), ranking 2nd in the world among 113 countries. The conditions of the legal regulation of blockchain and cryptocurrencies are neutral, and since the values of the sub-criterion of the rule of law are high (0.89), the amount of the difference between weighted (multiplied by Rule of Law Index score) and unweighted assessments are not significant. This indicates low risks associated with the general conditions of compliance with legal safeguards in Denmark.
Enabling Infrastructure Environment
Denmark in 2018 is the leader of the E-Government Development Index and number 3 in the Doing Business Rating.