Hi, this second article in my series dives into the state of Bitcoin in Albania.
The road to regulatory compliance and taxes.
In 2017, the Bank of Albania expressed concerns about the regulatory framework's inability to anticipate and address the challenges posed by the cryptocurrency market. The institution argued that users faced substantial risks due to the heightened anonymity associated with cryptocurrency, posing challenges related to money laundering, terrorism financing, and smuggling.
Bitcoin and cryptocurrencies are therefore legal to hold and trade in Albania. Albania's licensing system for cryptocurrency exchanges precedes the country's introduction of a digital asset taxation policy, slated to enable the government to levy taxes on income and profits arising from cryptocurrency investments.
Although Albanian legislation permits the legal operation of cryptocurrency trading firms within its jurisdiction, there are presently no licensed entities conducting operations in Albania.
Despite Albania's attempts to comply with the Council of Europe’s Committee of Experts’ report on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval), the latest assessment report on Albania determined that the country has not made enough advancements in aligning its measures with the Financial Action Task Force (FATF) recommendations to combat money laundering and terrorist financing.
Mining crypto in Albania: not profitable.
Albanian legislation further categorizes cryptocurrency mining as the use of computing power to verify transactions and acquire virtual assets. While the legality of cryptocurrency extraction remains unclear, law enforcement in the country has targeted illegal mining facilities, prosecuting some operators.
The recent legislation designates income from cryptocurrency transactions or mining as corporate income derived from business activities. For private individuals benefiting from such income, a capital gains tax of 15% will be applicable.
From the Albanian lek to the dollar to Bitcoin.
The official currency of Albania is the Albanian lek, historically divided into 100 qintars and pegged to the US dollar. The Albanian lek is predominantly used for local transactions within Albania. For international trade and transactions, the US dollar was utilized, subject to applicable exchange rates, yet today undergoing fierce competition from Bitcoin and Stablecoins. BINANCE is the most popular Bitcoin exchange in Albania, followed by Kraken and Bitpanda. Today, Albanians who want to buy Bitcoin have to go through a complete KYC procedure.
Albania owns no Bitcoin and needs to look at El Salvador.
To be significant in the upcoming Bitcoin era, the country will need to address its shortcomings regarding institutional Bitcoin adoption and buy some Bitcoins like El Salvador has done. The small and rapidly closing window of opportunity is forcing more small nations that lack a reserve of Bitcoins to take these necessary steps to remain relevant by 2030.
Due to the necessity of owning Bitcoin, political decisions could bypass the lagging banking industry. These smaller nations will typically be wiped out, and be confronted with the consequences of "holding onto the past".
Albania's total reserves were reported at USD 5.266 Billion in 2022 and included holdings of monetary gold, special drawing rights, reserves of IMF members held by the IMF, and holdings of foreign exchange under the control of monetary authorities. The nation doesn't own any Bitcoin, leaving it vulnerable in case Bitcoin flips the dollar, or at least co-exists with it.
I hope this second article was informative.
