Stablecoins: Regulation and Taxation in Germany
Stablecoins play a central role in today's crypto market – as a bridge between fiat and crypto, as a medium of exchange, and as a basis for decentralized applications. But what exactly are stablecoins, how do they differ from other types of tokens, how does Europe regulate them with MiCAR – and what does this mean for investors and exchanges?
What are stablecoins?
Stablecoins are cryptocurrencies whose value is usually pegged to a stable fiat currency such as the U.S. dollar or euro. This is intended to prevent price fluctuations and offer a stable digital alternative to cash.
Types of stablecoins
✅ Fiat-backed stablecoins
Example: USDC, USDT
These are backed by deposits in a traditional currency, e.g. USD in a bank account. Price stability results from the real 1:1 redemption option.
✅ Algorithmic Stablecoins
Example: DAI
This type of stablecoin is not backed by fiat, but by overcollateralized cryptoassets (e.g. ETH). An algorithm regulates supply and demand to stabilize the price.
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- Advice by specialized attorneys and tax advisors
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- Clarification of ambiguous issues
Distinction between stablecoins and similar token types
✅ Tokenized real-world assets (RWAs)
These are tokens that represent real assets such as real estate, bonds, or precious metals. They are backed by real assets in the background.
✅ Bridge tokens
These are tokens that represent an asset on another blockchain. They are created by storing a token on blockchain A and issuing a representation on blockchain B.
✅ Wrapped tokens
Example: WBTC (Wrapped Bitcoin)
These represent cryptoassets on another blockchain. The original asset (e.g. BTC) is held in custody and an equivalent token is issued.
Stablecoins as a hybrid form
Stablecoins combine technical aspects of both tokenized real-world assets (as they digitally represent fiat currencies) and wrapped tokens (because fiat values are held in custody and equivalent tokens are issued).
Stablecoins in MiCAR – new rules for old concepts
The EU's Markets in Crypto-Assets Regulation (MiCAR) introduces new rules for trading in stablecoins. From the end of 2024, only stablecoins with authorization may be publicly offered or listed on trading platforms in the European Economic Area (EEA).
Conditions for MiCAR approval:
- Coverage requirement: Full reserve coverage by fiat or approved assets
- Approval requirement: Issuers must be approved and supervised by an EU authority
- White paper: Mandatory publication with risk disclosures, business model, and repayment terms
- Repayment obligation: Token holders are entitled to redemption in fiat
- Prohibition of algorithmic stablecoins: Applies if 1:1 coverage is not guaranteed
What happens without MiCAR approval?
For stablecoins without approval, MiCAR regulation has drastic consequences – both for providers and users:
Crypto exchanges are no longer allowed to offer or list stablecoins without MiCAR approval if they serve customers in the EU. For internationally operating platforms, this means that they must either integrate MiCAR-compliant alternatives or delist affected stablecoins. This could affect stablecoins such as USDT, for example, if no MiCAR-compliant structure is introduced.
For investors, this means that access to unlicensed stablecoins will become significantly more difficult. Exchanges in the EU will delist these tokens and wallets and trading apps could block or restrict trading for users from the EU. Use in the DeFi sector will also be affected, as MiCAR also sets legal limits on decentralized applications.
The goal is clear: only trustworthy, regulated stablecoins should survive in the European market in the long term.
MiCAR-approved stablecoins
As of May 2025, the European Securities and Markets Authority (ESMA) has authorized ten issuers to issue a total of 15 stablecoins – ten of which are pegged to the euro and five to the U.S. dollar.
€€ Euro-pegged stablecoins
|
/ |
Issuer | Blockchain(s) |
|---|---|---|
| EURC | Circle | Ethereum |
| EURI | Banking Circle | Ethereum, BNB Smart Chain |
| EURe | Monerium | Ethereum, Polygon, Gnosis |
| EURCV | SG Forge (Société Générale) | Ethereum |
| EURD | Quantoz Payments | Algorand |
| EURQ | Quantoz Payments | Not specified |
| EUROe | Membrane Finance | Ethereum, Solana, Arbitrum, Avalanche, Optimism, Polygon, Concordium |
| EURØP | Schuman Financial | Ethereum, Polygon |
| EURSM | Stable Mint | Ethereum, BNB Smart Chain |
| EURR | StablR | Ethereum |
$$ U.S. dollar-pegged stablecoins
|
/ |
Issuer | Blockchain(s) |
|---|---|---|
| USDC | Circle | Ethereum |
| USD1 | Crypto.com & 1S1C | Not specified |
| eUSD | Membrane Finance | Ethereum, Solana, Arbitrum, Avalanche, Optimism, Polygon, Concordium |
| USDQ | Quantoz Payments | Not specified |
| USDR | StablR | Ethereum |
TerraUSD (UST) – How an algorithmic stablecoin collapsed
TerraUSD (UST) was an algorithmic stablecoin that was not backed by real assets, but rather by an internal exchange mechanism with the LUNA token.
The system worked as long as there was trust:
- If UST was above USD 1 → UST was burned, LUNA was minted
- If UST was below USD 1 → UST was exchanged for LUNA
In May 2022, disaster struck:
- Large investors withdrew massive UST holdings
- The peg to the U.S. dollar broke
- More and more UST was exchanged for LUNA
- A self-reinforcing chain reaction ensued:
→ More UST sales → More LUNA issuance → LUNA devalued → Even more sales - Result: Hyperinflation of LUNA, total loss of both coins
The moral of this story:
Algorithmic models without real anchors are extremely vulnerable to market shocks and loss of confidence. They create self-reinforcing dynamics that, in extreme cases, can lead to complete system collapse.
Tax treatment of stablecoins in Germany
In Germany, stablecoins are also subject to the tax rules for cryptocurrencies. This means:
- Every exchange transaction is considered a private sale.
- If the holding period is less than one year, any profit is taxable.
- In theory, these profits should not arise with stablecoins, as their value is “stable.”
Why tax liabilities may still arise:
There are certain exchange rate risks between the euro and the dollar. Even if a stablecoin such as USDC keeps its dollar value constant, its value in euros can change significantly. Example:
- You buy USDC 10,000 at EUR/USD 1.00 (equivalent to EUR 10,000).
- Sale at EUR/USD 1.10 (you now receive EUR 11,000)
- → EUR 1,000 taxable profit, even though the USDC itself was stable
EUR/USD exchange rate 2015-2025
Special case: Exchange of one $ stablecoin for another $ stablecoin
If a stablecoin is exchanged for another stablecoin of the same fiat currency, for whatever reason, it may be questioned whether this actually constitutes a private sale transaction or whether the holding periods and acquisition costs of the original coin are transferred to the other coin.
The reason for this is that in these cases, no other economic asset is actually acquired, but rather the two objects being exchanged are “identical.” Identical describes the similarity of economic assets in an exchange transaction within the meaning of Section 23 of the German Income Tax Act (private sales transactions). An exchange is only not a taxable sale transaction if the asset given up and the asset received are identical, i.e., of the same type.
Parameters of identity
The tax assessment of identity is based on several criteria:
|
/ |
Explanation |
|---|---|
| Technical similarity | The tokens are based on the same or comparable technical structure (e.g. ERC20 on Ethereum). |
| Functional identity | Both tokens serve the same purpose (e.g. stability through pegging to the same reference value, e.g. USD 1). |
| Economic equivalence | Both tokens represent the same economic claim (e.g. right of redemption in USD, 1:1 peg). |
| Equality of risk | There is no difference in economic risk (e.g. same issuer risk or uniform collateralization practice). |
| Availability / Fungibility | The tokens are interchangeable on the market and can be exchanged or accepted by each other. |
| Prevailing view | According to general market opinion, the tokens are considered economically interchangeable. |
Example:
Exchange USDC for USDT – both are stablecoins pegged 1:1 to the U.S. dollar.
- At first glance:
Two different tokens, with different issuers, different tickers, and technical differences – so they're not identical, right? - From a tax perspective (according to prevailing opinion):
Yes, they are identical!
This is because it is not only the technical difference that is decisive, but also the economic content:
If two tokens represent the same fiat value, are associated with the same repayment obligation, serve the same economic purpose, and are de facto fungible, then they are to be assessed as similar (= identical) for tax purposes.
Reason: No economic difference
- Both tokens are not used for speculation, but for value stabilization.
- Neither has a relevant price difference.
- An exchange often takes place only for technical or platform reasons.
- The economic content is identical: 1 USD on the blockchain.
Your tax advisors for stablecoins in Germany
Stablecoins are not tax-free, risk-free crypto assets. They are often used to remain invested in the crypto sector without directly converting back to fiat currencies. This means that they are naturally subject to the normal inflation risk of the underlying fiat currency. Our experienced tax advisors for stablecoins can therefore assist you with all questions relating to the taxation of crypto assets.
The easiest way to reach us is via info@winheller.com or +49 69 76 75 77 85 28.
