i Definition of virtual currencies

Although there has been a steady increase in the public awareness of, and attention from the legislature and the administration about, virtual currencies (and cryptocurrencies based on blockchain technology in particular) in Austria over the past few years, mainly owing to the rise of Bitcoin and the popularity of initial coin offerings (ICOs) and initial token offerings (ITOs), the momentum has subsided. Various industries have long used virtual currencies tailored for their respective purposes, such as online gaming and social gaming, where operators often use self-created currencies or currency units for placing stakes or making certain payments inside a game, albeit in most cases not based on blockchain technology.2 Over the past three years, there have been several ICOs and ITOs, but the market has since calmed.

The Austrian legislature has continued to focus on the matter, but virtual currencies have still not been incorporated as a concept in Austrian law. However, the definition of virtual currencies as set out in Article 1(2)(d) of the Amendments to the Fourth EU Anti-Money Laundering Directive3 (often referred to as the Fifth AML Directive) will soon be introduced into the Austrian legal system in the course of the implementation of the Amendments to the Fourth EU Anti-Money Laundering Directive into Austrian law. Apart from this new definition based on supranational EU law, virtual currencies may be classified by using the existing legal definitions in Austrian legislation, both under general civil law as well as under regulatory legislation, and in particular in the sectors of banking and financial services regulation and capital markets regulation.

The legislative definition set by the Amendments to the Fourth EU Anti-Money Laundering Directive will soon be implemented into the Austrian Financial Markets Anti-Money Laundering Act (FM-GwG) as follows:

Virtual currencies: a digital representation of value that is not issued or guaranteed by a central bank or a public authority, and is not necessarily attached to a legally established currency, and does not possess a legal status of currency or money, but is accepted by natural or legal persons, as a means of exchange, and which can be transferred, stored and traded electronically.4

This definition is based on function, and does not make a distinction as to whether virtual currencies are generated using blockchain technology.

Cryptocurrencies are commonly understood to be special forms of virtual currencies. Payment systems and the storage and management of cryptocurrencies are organised by a decentralised computer protocol: protection is ensured by cryptographic signature sequences. However, there may be blockchain-based coins, often referred to as tokens, that are not created by a decentralised network of miners by solving complex mathematical problems, but rather issued by an individual or company in the course of an ICO or ITO. During 2017, there was increased activity in Austria in this sector, and a number of companies (in particular start-ups) have started evaluating or have successfully completed ICOs or ITOs, including some that have been reviewed by the Austrian Financial Markets Authority (FMA). At the end of 2018, the FMA for the first time also reviewed and approved a security token that confers 'real' profit participation rights to its holders (see Section II.ii).

There are numerous questions from a legal perspective that need to be considered and (should) influence business decisions when it comes to conducting or setting up a business involving virtual currencies. Solid legal advice is key to conducting virtual currency businesses and transactions (including ICOs and ITOs) successfully and preventing sanctions (e.g., for failing to observe banking and financial services licensing obligations).

ii Virtual currencies and general civil law

Starting from a very general perspective, the Austrian Civil Code (ABGB) distinguishes only between the notions of persons and objects. Section 285 ABGB states very generically that anything that is not a person (qualified as such from a legal perspective) is an object. As virtual currencies obviously cannot be qualified as persons, they must be qualified as objects. Within the term 'objects', a distinction is made between movable and immovable on the one hand, and physical and non-physical on the other. According to Section 292 ABGB, physical objects are those that are perceptible by sense. This is understood to include objects that have a certain spatial delimitation, because only then can an object be physically controlled.5 According to the ABGB, any objects that are not considered physical qualify as non-physical objects.

If, inter alia, data, formulae, codes and software are not placed in or on a physical object (e.g., data saved on a USB stick), they are considered non-physical objects.6 This concept can be illustrated by using Bitcoin as an example. An item consisting of several individual objects (whether physical, non-physical or both) (Section 302 ABGB), such as a storage medium on which an entire blockchain, and thus also the private key of a Bitcoin owner, is stored, is qualified as a physical object according to Section 302 ABGB if it is regarded as a single unit in legal transactions. Therefore, a card containing a blockchain and a digital key of Bitcoin could be regarded as universitas rerum, and therefore as a physical object. However, as a digital key, which may be temporarily stored on a physical storage medium, but can also be transferred separately (i.e., digitally), Bitcoin shall be qualified as a non-physical object pursuant to Section 292 ABGB, and not within the meaning of Section 302 ABGB as universitas rerum.7 Virtual currencies may also be qualified as non-physical objects by using the following line of argument: virtual currencies constitute data records in an account book. These data records determine which address contains which certain value.8 As neither a data record nor an account book is (necessarily) a physical object, virtual currencies are classified as non-physical objects under general civil law.

iii Virtual currencies and the term money

The mainstream use and understanding of the word currency in terms of virtual currencies implies that – at least under certain circumstances – virtual currencies could be considered as money from a legal perspective. However, the legal definition of currencies is legal tender recognised by the state that is subject to compulsory acceptance, also referred to as fiat currencies.9 Money as qualified by Austrian law is created by a sovereign act in which the state determines a certain currency and raises it to the status of legal tender.10 Money is further considered as a means of payment recognised by the state and carrying an obligation to be accepted as legal tender.11 The Euro Act further qualifies what is considered as legal tender.12

Virtual currencies, on the other hand, are (generally) not a state product, but are either created decentralised and online (as in the case of Bitcoin), or issued by a non-governmental person, company or agency (e.g., a company that carries out an ICO). Virtual currencies (generally) lack an official act of a state government, which is why they are generally not regarded as money.

As virtual currencies are not qualified as money (or legal tender or currency), transactions involving the exchange of virtual currencies are therefore generally not subject to the special civil law rules on making a purchase, but rather are subject to the more general rules of exchange in kind (i.e., qualified as exchanging one object for another).13 Under Section 1053 ABGB, through a purchase agreement, one item is given by one person to another person for a certain amount of money. As a virtual currency is not qualified as money, exchanging such virtual currency for another object (e.g., another virtual currency, such as a coin or token issued in the course of an ICO, being exchanged for Ether) is subject to an exchange-in-kind contract rather than a purchase contract.14 This also corresponds to the definitions of the Amendments to the Fourth EU Anti-Money Laundering Directive and the Austrian Ministerial Draft on the Federal Act amending the FM-GwG (the Ministerial Draft), which refer to virtual currencies as means of exchange15 accepted by natural or legal persons.16 According to Section 1045 ABGB, an exchange in kind is a contract whereby one object is exchanged for another object. The difference in the special form of purchase contracts becomes clear by reading Section 1046 ABGB: money is not an object of an exchange-in-kind contract. However, it follows that in the case of exchanging virtual currencies for fiat money (such as the euro), the transaction is considered a purchase contract.


The following provides a brief overview of the applicability of the Austrian Alternative Investment Fund Managers Act and the Austrian Capital Markets Act to virtual currencies.

i Alternative Investment Fund Managers Act

In accordance with Section 2(1)(1) of the Alternative Investment Fund Managers Act (AIFMG), any collective investment undertaking (including its sub-funds) that collects funds from a number of investors to invest them for the benefit of those investors in accordance with a specified investment policy shall be deemed to be an alternative investment fund (AIF) as long as the funds directly serve the operational activity and the fund is not an undertaking for collective investments in transferable securities (UCITS) pursuant to the UCITS Directive.17 The management of an AIF requires a licence as alternative investment fund manager (AIFM) to be issued by the FMA.

Virtual currencies may also be part of the assets of an AIF. The explanatory notes to the AIFMG expressly emphasise that the AIFMG should apply to all AIFMs that manage the full range of funds not covered by the UCITS Directive.18 An Austrian AIF can thus be used to implement any investment strategy in which (also) virtual assets are invested.19 Whether the investment of virtual currencies is subject to the AIFMG has still not been entirely clarified by the Austrian authorities. However, the FMA has now taken the view that business models requiring participation in the mining of cryptocurrencies such as Bitcoin may constitute an AIF and may therefore fall within the scope of the AIFMG.20 Consequently, such business models may be subject to a licence issued by the FMA.21

ii Capital Markets Act

According to Section 2 of the Capital Markets Act (KMG), the public offering of securities or investments is only permitted if a prospectus has been published, at the latest one banking day prior to the launch of the offer. With respect to securities as qualified by the KMG, the European and national legislators understand transferable securities in accordance with the Markets in Financial Instruments Directive II.22 These mainly include equities and equity-type securities, as well as non-equity securities, such as debt securities and other securitised debt securities.23 Whether virtual currencies qualify as securities pursuant to the KMG is controversial: as the KMG also subjects the public offer of investments to the prospectus requirement, even if taking the view that virtual currencies do not constitute securities, it is still necessary to assess whether they fall under the definition of investments pursuant to Austrian law. Differences between securities and investments basically only exist with regard to the specifications by which the prospectus has to be prepared. Otherwise, the differences are negligible.

In accordance with Section 1(1)(3) KMG, investments are uncertificated property rights (rights to claims, membership rights or rights in rem)24 for the direct or indirect investment of several investors who carry the risk, either alone or jointly with the issuer, and that investors do not administer themselves. The term investment includes uncertificated profit participation rights, limited partnerships and silent participations.25 Prospectuses for investments do not follow the scheme of the Prospectus Regulation,26 but those according to the annexes provided in the KMG.

A precondition for the existence of an investment is that it is issuer-based (i.e., that property rights are mediated through an issuer). Coins designed as decentralised virtual currencies (such as Bitcoin) are exempt as investments because they do not have an issuer who acts as a mediator.27 Coins are created by a large number of users on the basis of protocol calculations (mining). Moreover, with genuine cryptocurrencies such as Bitcoin or Ether, the essential factors that are decisive for an investment pursuant to the KMG are not present: thus, although there is a property right in the broadest sense, there is no investment in cryptocurrencies. Genuine cryptocurrencies such as Bitcoin do not convey membership-like rights to a company, and investors do not invest funds with the aim of having a third party invest, or otherwise invest the funds at the risk of multiple investors for the purpose of multiplication. There is, therefore, a lack of the community aspect or joint risk in an investment about cryptocurrencies as required for the concept of investments. The income derived from the mining or sale of genuine cryptocurrencies is rather generated by the transfer of an asset, and the price or resale price for such transactions is formed by the rules of supply and demand. Genuine cryptocurrencies are non-physical objects that can be exchanged for other goods or legal tender. Such coins are therefore an asset or a product (see also Section I.ii).28 The public offering of a commodity is not a public offer of a security or an investment that requires the issuing of a prospectus.29

A distinction must be made between genuine decentralised cryptocurrencies such as Bitcoin and Ether, and those coins and tokens that can be created centrally by a certain individual or company in any number and are not open to mining by other users, such as generally is the case with ICOs or ITOs.30 Such cases must be evaluated individually as to whether there is an investment pursuant to the KMG. If a coin or token represents a value attached to a project or company (and the coin or token thus has an intrinsic value), there is a considerable risk that it will meet the requirements for a prospectus requirement under the KMG.31 In cases where coins or tokens confer affiliate rights or economic ownership or are an investment in a company or project, or it is apparent that several investors have invested or managed a common account32 in which the invested funds have been used for profit maximisation, such cases may constitute an investment subject to the regulations of the KMG.

Issuers have to decide from an ex ante consideration at the time of an ICO or ITO whether the token or coin to be issued fulfils the requirements for a prospectus obligation according to the KMG. If the issuer comes to the conclusion that the ICO or ITO qualifies as an investment as per the KMG and the issuer wants to avoid creating a prospectus, the issuance of the coin or token must be designed so that it meets one of the exceptions of Section 3 KMG (e.g., the offer of tokens or coins for a minimum of €100,000; an offer to qualified investors only; or an offer to fewer than 150 persons per Member State of the European Economic Area who are not qualified investors). In these cases, a prospectus will not be required.

If there is an investment as per the KMG, the issuer's other legal obligations also depend on the issuance volume. If the issuance volume of the ICO or ITO is less than €250,000, it is excluded from the scope of the obligations as per the KMG. For issuance volumes from €250,000 to €2 million, the provisions of the Alternative Financing Act (AltFG) apply, but not the requirements of the KMG with regard to a prospectus. In this case, the issuer must prepare an information sheet in accordance with the AltFG. For issuance volumes from €2 million to €5 million, the issuer may draw up a simplified prospectus according to Scheme F of the KMG. For issuance volumes from €5 million onwards, a KMG brochure according to Scheme C is required.

In addition to ICOs and ITOs, the FMA had to examine a security token for the first time in late 2018. A security token is a tokenised security, based on the blockchain. Pursuant to the FMA's previous legal opinion, the security token was subject to the prospectus requirement of the KMG and the FMA approved the prospectus published by the issuers.33 This is to be seen as the first approval for tokenised securities in Europe. However, the reason for the mandatory prospectus was that the respective profit participation right was classified as a security, not that it was issued via blockchain. It is nevertheless expected that this will be of great relevance for issuing other securities in the future (i.e., shares or bonds).


i Banking Act

All banking transactions subject to the Banking Act (BWG) are defined by the exhaustive list in Section 1(1) BWG. The most relevant transactions for virtual currencies are Section 1(1)(1) (deposit business), Section 1(1)(6) (issuing and managing means of payment) and Section 1(1)(7) (trading in foreign cash and financial instruments).

Deposit business (Section 1(1)(1) BWG)

Deposit business pursuant to Section 1(1)(1) BWG is the receipt of external funds for administration (first case) or as a deposit (second case).

Funds are accepted within the meaning of Section 1(1)(1) BWG for administration (first case) if the recipient has a 'certain degree of discretion' with regard to these funds in order to use them as agreed in the interest of the depositor.34 The depositor thus has an unconditional claim for repayment of the amount remaining under contractually agreed administration. The realisation of an administrative activity does not conflict with the fact that the depositor can decide for him- or herself in individual cases or intervene with instructions, as long as the recipient has 'the power of limited independent action'. However, in cases where the depositor specifies in each case how the funds shall be invested, and thus the receiving institution lacks any discretionary power, money is not considered as being accepted for administration. In addition, if the repayment claim depends on the economic condition of the company in which the investor participates by acquiring company shares, this is not considered a deposit business.35

According to prevailing opinion, the acceptance of repayable funds from the public that are used as a means of investment is considered a deposit subject to Section 1(1)(1) BWG (second case), if such business is undertaken not only occasionally, but rather as a regular business model.36 A deposit pursuant to Section 1(1)(1) BWG (second case) is subject to the depositor having an unconditional claim for repayment with respect to the money deposited.37 A conditional repayment claim, which also includes a loss participation of the depositor, therefore does not qualify as a deposit within the meaning of the law.38

The issuance of genuine virtual currencies shall not be qualified as a deposit business according to Section 1(1)(1) BWG. As there is no issuer for such virtual currencies, users also have no repayment claim. The situation may be different with centrally issued virtual currencies. In the case of ICOs and ITOs in particular, the receipt of funds for administration (first case) may be fulfilled if the investor can return the coins or tokens after the expiration of a certain time to the issuer, so that these coins or tokens have a term and an attainable repurchase price (e.g., depending on financial key figures of a company issuing the coins or tokens), or the development of a particular project is funded by the coin or token proceeds.

Issuing and managing means of payment (Section 1(1)(6) BWG)

The term means of payment generally comprises accepted monetary surrogates in circulation that are accepted by a larger group of persons, such as credit cards, travellers cheques and e-money. Thus, the issuance of vouchers or regional currencies, as well as the issuance of coins or tokens created within the framework of an ICO or ITO, may well be subject to the provisions of Section 1(1)(6) BWG. ICOs regularly focus on applying the exception of the limited network pursuant to Section 1(1)(6) BWG, according to the prevailing administrative practice used within the meaning of Section 2(3)(1) of the Austrian E-Money Act (E-GeldG), if the means of payment issued only has a limited amount of points of acceptance (such as a limited number of service providers accepting the coin, or in cases where a coin is only accepted for the acquisition of a limited selection of goods), so that there is no means of payment recognised by the general public and, in particular, the coin issued in the ICO does not create a parallel currency posing a systemic risk to the legal tender in use.39

Section 1(1)(7) BWG refers to trading in foreign legal tender and financial instruments. As the FMA does not (currently) qualify Bitcoin or similar virtual currencies as financial instruments or means of payment, the aforementioned activity does not fall under Section 1(1)(7) BWG.

ii Securities Supervision Act

Advice about and brokerage and administration of virtual currencies

Transactions involving the acquisition and sale of virtual currencies are currently not subject to a licence obligation or to a trade licence in Austria, as virtual currencies are not considered financial instruments.40 All activities referred to in Section 3(2) of Securities Supervision Act requiring a licence issued by the FMA are based on the term financial instruments: investment advice in relation to financial instruments; portfolio management by managing portfolios on an individual basis with the discretion under a power of attorney of the client, if the client portfolio contains one or more financial instruments; and acceptance and transmission of orders if these activities are related to one or more financial instruments.

iii E-Money Act

Virtual currencies are currently not legal tender in Austria (see Section I.iii). Section 1(1) E-GeldG defines e-money as any electronically (including magnetically) stored monetary value in the form of a claim against an e-money issuer issued against payment of a sum of money. Therefore, there must at least be the possibility of a three-party relationship (issuer–buyer–third point of acceptance).41 The criteria must be cumulative.42 However, virtual currencies are different from e-money because a virtual currency, unlike e-money, does not express capital in conventional units of account (e.g., euros) but in virtual units of account.43 Decentralised cryptocurrencies such as Bitcoin or Ether also do not have a single issuer, but are created in the network via a specific algorithm; they also do not create a claim against an issuer. The situation may, of course, be different in the case of virtual currencies issued in the course of an ICO or ITO. Frequently, participants in an ICO acquire only a claim against the issuer for the transfer of the respective volume of coins or tokens to a wallet. In general, this requirement is immediately fulfilled by transferring coins or tokens to a participant's wallet. In ICOs, there may thus be cases in which an issuer would require a licence as an e-money institution pursuant to the E-GeldG if the exceptions from the licence obligation – such as found in the case of a limited network (see also Section III.i) for the acceptance of the issued coins or tokens – are not met.

iv Payment Services Act

The commercial provision of payment services may trigger a concession obligation, in particular if a virtual currency is qualified as a means of payment within the meaning of the BWG (see Section III.i) or as a payment instrument. A payment instrument within the meaning of Section 4(14) of the Payment Services Act (ZaDiG) is any personalised instrument, such as a credit card including the cardholder's code or signature, or any personalised procedure agreed between the payment service user and the payment service provider that can be used by the payment service user to issue a payment order, such as the access code of the payment service user and the transaction numbers and transaction codes in online banking.44 Owing to the lack of personalisation, virtual currencies frequently do not constitute payment instruments pursuant to the ZaDiG, as they are usable and are transferable by anybody. Furthermore, the FMA also applies the limited network exception to the ZaDiG (Section 3(3)(11) ZaDiG; see also Section III.i).


Under Austrian criminal law, concealing or disguising the origin of assets resulting from certain criminal activities is classified as money laundering. In addition to penal provisions (Section 165 Austrian Criminal Code (StGB)), various laws and regulations exist in this context to prevent money laundering.

The main Austrian law on preventing money laundering is the FM-GwG. This federal Act was passed to implement the EU's Fourth Anti-Money Laundering Directive, and is essentially intended to prevent money laundering and the financing of terrorism in the banking and financial services sectors. The Ministerial Draft implements the Amendments to the Fourth EU Anti-Money Laundering Directive, and for the first time expressly refers to virtual currencies and includes a definition thereof (see also Section I.i). In the course of the public consultation, various stakeholders issued critical statements regarding the Ministerial Draft.45

According to Section 1 FM-GwG, the obligations stated in the FM-GwG are directed at credit institutions and financial institutions; the Ministerial Draft also includes certain providers of services with regard to virtual currencies.46 The planned definition includes not only providers of wallets and exchanges but also service providers who offer the transfer of virtual currencies and the provision of financial services for the issuance and sale of virtual currencies into the scope of obliged entities.47 Further to this, a number of Austrian laws and regulations refer to the FM-GwG when it comes to the anti-money laundering (AML) and counter-terrorist financing (CTF) rules applicable to certain obliged entities. This is the case, inter alia, in the sports betting Acts of Austria's nine provinces, and also in the AIFMG, the E-GeldG and the BWG. However, other Austrian legislation beyond the FM-GwG may also include specific requirements and obligations aimed at the prevention of money laundering and the financing of terrorism.

The FM-GwG provides for various obligations to be met by the respective obliged entities. Insofar as an entity involved in doing business with virtual currencies is considered an obliged entity pursuant to the FM-GwG, it has to subject transactions to its obligations under the FM-GwG, including customer due diligence (know your customer), checking the source of funds and a risk assessment. The Ministerial Draft also contains a registration obligation with the FMA for providers of services with regard to virtual currencies. In the course of registration, a service provider must disclose, inter alia, the name or company name of the service provider, the managing director, the company's registered office, a description of the business model, a description of the internal control system to comply with the requirements of the FM-GwG, and the identity of the owners and the amount of their shareholding in the service provider. The FMA shall refuse registration in case of doubts as to whether the requirements of the FM-GwG can be met or if the FMA has doubts as to the personal reliability of a person who wishes to become a service provider with regard to virtual currencies. The lack of such registration could result in the FMA prohibiting the service provider from performing its activities. The FMA should, however, first take less restrictive measures.

According to Section 4 FM-GwG, obliged entities must prepare an internal risk assessment regarding money laundering and terrorist financing. Furthermore, the FM-GwG provides that certain due diligence obligations towards customers must be applied, with enhanced due diligence measures applying in certain cases. Pursuant to Section 5 FM-GwG, customer due diligence is required in the following cases, irrespective of whether the transaction or business relationship is performed by using virtual currencies or fiat money, whereby the thresholds set by the FM-GwG in euros will apply by using exchange rates as in the case of transactions with foreign fiat money (non-euro):

  1. establishing a business relationship;
  2. execution of all transactions that do not fall within the scope of a business relationship (occasional transactions) if either:
    • the amount of the transaction exceeds €15,000; or
    • the transaction is processed electronically by a payment service provider and the amount exceeds €1,000;
  3. the deposit or disbursement of saving deposits if the amount exceeds €15,000;
  4. if it is suspected that a customer is a member of a terrorist group, or is involved in transactions that serve money laundering or terrorist financing; and
  5. in the case of doubts about the authenticity or appropriateness of previously obtained customer identification data.

If one of the above-mentioned cases occurs, the due diligence obligations pursuant to Section 6 FM-GwG, or the simplified or increased obligations pursuant to Section 8 or Section 9 FM-GwG, respectively, must be complied with. The obligations are aimed at depriving customers of the advantage of anonymity; therefore, the most important tasks are to ascertain the best possible identification of a customer and his or her relevant assets, which includes virtual currencies. Customers can be identified, for example, by presenting certain identification documents. Various documents relating to a customer's business activities or financial circumstances can be used to prove the legal origin of assets. Appropriate due diligence measures will also have to be undertaken in the case of handling transactions involving virtual currencies, whereby there are no specific measures that the FM-GwG stipulates as regards transactions involving virtual currencies. The degree of the due diligence methods applied depends on the result of the internal risk assessment, which will need to take the specifics of virtual currencies, in particular as regards traceability and potential anonymity, into account, in particular in terms of checks into the source of funds and wealth.

Moreover, the FM-GwG also provides for certain reporting obligations: according to Section 16 FM-GwG, an obliged entity must report to the Financial Intelligence Unit when there is a suspicion that a customer is using or attempting to use funds resulting from a criminal act listed in Section 165 StGB, or if there is a suspicion that a transaction is related to a criminal organisation, terrorist organisation or terrorist financing. The Financial Intelligence Unit (Money Laundering Reporting Office) is an agency established at the Federal Criminal Police Office. Transactions that create a reporting obligation must not be carried out subject to instructions from the Money Laundering Reporting Office.48

The FM-GwG in its current form is the implementation of the Fourth Anti-Money Laundering Directive. Amendments to the Fourth Anti-Money Laundering Directive entered into force on 9 July 2018, and Austria is in the process of implementing these into national law. The Ministerial Draft has not yet entered into force as the legislative procedure is ongoing (see also Section X).


There is no specific regulation of exchanges in Austria yet, and – subject to the business model of exchanges not falling under specifically regulated activities pursuant to Austrian banking and financial services regulations – they are generally not subject to licensing by the FMA. At an EU level, amendments to the Fourth Anti-Money Laundering Directive for the first time include exchanges as obliged entities, and thus operators of exchanges will also be subject to AML/CTF legislation in Austria once the Ministerial Draft enters into force (see Sections IV and X).


Mining currently does not fit into any regulatory or supervisory structure. On 22 May 2018, the FMA published an update to its FAQ catalogue on the application of the AIFMG. In these FAQs, the FMA takes the view that certain business models in connection with the mining of cryptocurrencies may constitute an AIF.49 The most important consequence of the applicability of the AIFMG to these business models is the inadmissibility of distribution to private consumers, as such business models do not meet the requirements of Section 48 or 49 AIFMG.50 However, it remains to be seen whether the FMA will eventually prevail with this view (see also Section II.i).


There are no explicit regulations regarding issuers and sponsors. The European Parliament and the Ministerial Draft both define virtual currencies as 'a digital representation of value that is not issued or guaranteed by a central bank or a public authority'.51 However, new units of genuine cryptocurrencies are created by mining, and there are no issuers in the area of typical cryptocurrencies such as Bitcoin or Ether.

In comparison, there are virtual currencies that are generated within an ICO or ITO. Tokens are basically digital coupons whose functions can vary depending on the ITO in question. In most cases, they serve as the currency for a project financed with them, and companies that give out such tokens to finance their project can therefore be considered as issuers. The initial issuance of coins or tokens by a company to potential investors against the payment of a cryptocurrency (especially Bitcoin or Ether) or money has become a popular financing model in the past year. It is therefore necessary to examine the banking and investment supervisory classification of ICOs (see Sections II and III).


Given that they are considered as objects under civil law, virtual currencies are qualified as a person's assets under Austrian criminal law. Therefore, both civil and criminal law apply to virtual currencies, notwithstanding the more complicated regulatory law situation. As a result, the full scope of criminal law applies to criminal conduct involving cryptocurrencies just as it would if the offence involved legal tender: for example, the embezzlement of a virtual currency or any fraudulent behaviour to elicit virtual currency is prosecuted under Austrian criminal law, and virtual currencies can be the subject matter of civil or criminal proceedings.

There are, however, certain factual difficulties both in criminal and civil procedural law, in particular when it comes to enforcement. Besides the obvious – such as the anonymity immanent to many cryptocurrencies, which leads to difficulties when trying to recover elicited or embezzled assets – there are difficulties in confiscating virtual currency in criminal procedures, and also in executing civil adjudications. At the moment, Austrian authorities have no means to seize virtual currencies other than forcing their owners to transfer a virtual currency to a wallet in the authorities' disposal. This is done via inflectional punishments (monetary punishments and, if necessary, detention) that are limited quantitatively and qualitatively.

Inflectional punishments cannot be inflicted upon suspects under Austrian criminal procedure law, as they are in conflict with the nemo tenetur se ipsum accusare principle, prohibiting the authorities from forcing any person accused of a criminal offence to incriminate him- or herself in any way. This principle is construed widely, prohibiting any means to force a suspect to support the authorities in criminal proceedings against a suspect itself. Therefore, if a suspect is not cooperating, it currently is largely impossible to find, seize and confiscate assets in the form of virtual currencies from suspects under Austrian criminal procedure law.


According to Section 23 No. 1 of the Austrian Income Tax Act (EStG), income from a trade or business that is undertaken with the intention of making a profit can be characterised as a participation in a general economic activity.

Where cryptocurrencies are created by mining, this constitutes a commercial activity. The creation of cryptocurrencies is treated like the production of commodities. The operation of a virtual currency exchange, through which virtual currencies can be exchanged for other virtual currencies or purchased for fiat money, is considered a commercial activity, and thus any income derived from such business is subject to income tax. This also applies to virtual currency automated teller machines through which virtual currencies can be purchased, for example, by inserting euro banknotes.

The income tax treatment of virtual currencies held as private assets depends on whether they are interest-bearing. In that case, virtual currencies are qualified as assets pursuant to Section 27(3) EStG. For non-interest bearing assets, virtual currencies are subject to taxation according to Section 31 EStG in cases where the period between the acquisition and the disposal does not exceed one year. In cases of different units of a virtual currency having been acquired at different points in time but all being held in the same wallet, the units acquired first are treated as being disposed of first (the 'first in, first out' principle).

As regards value added tax (VAT), the exchange of fiat money for Bitcoin or other similar virtual currencies and vice versa is not subject to VAT. The Court of Justice of the European Union confirmed this in its landmark ruling in the Swedish Hedqvist case, which is transferrable to Austria due to the harmonisation of the VAT legislation across the European Union.52 According to the Austrian tax authorities, mining is also not subject to VAT owing to the lack of an identifiable beneficiary.53

With regard to using virtual currencies for paying for goods or services, in general the same tax rules apply as when using legal tender. The basis for the tax assessment is determined by the value of the virtual currency.


Recently, changes concerning the regulation of virtual currencies have also been considered at the national level. In March 2018, the Federal Minister of Finance, Hartwig Löger, proposed stricter regulations for cryptocurrencies.54 Specifically, Mr Löger mentioned a reporting obligation to the Money Laundering Reporting Office for transactions exceeding €10,000. He also proposed subjecting trading platforms for cryptocurrencies to the supervision of the FMA. As regards ICOs, which were extremely popular in Austria in late 2017 and early 2018, and thus also created relatively widespread media attention, Mr Löger stated that he favours introducing an obligation to produce a 'lightweight prospectus'. To review and implement these proposals, he convened a FinTech Regulatory Council to make proposals for appropriate legal framework conditions. The Council's priorities are the creation of the new lightweight prospectus law for ICOs and the regulation of virtual currencies similar to gold or derivatives.55 The Council is set to meet once every two months. It shall draft proposals, including recommendations and concrete measures that could be undertaken, with a particular focus on data protection and consumer protection.56 Mr Löger had initially set the deadline that by the end of 2018, the FinTech Regulatory Council should have defined concrete measures and presented concrete results in this area. Furthermore, he promised that 'by the end of this year [2018], there will be a circular letter from the FMA in which the insights of the Council can already be fixed in a legal adaptation area that will then also be valid'.57 So far, however, no documentation of the Council has been made publicly available.

Furthermore, Doris Margreiter, a member of the Social Democratic Party, submitted a formal written inquiry in Parliament to Mr Löger regarding her view of 'ICOs as partly unregulated high-risk businesses' on 7 September 2018. By way of example, the inquiry covers the following questions: will the government's efforts to regulate ICOs be intensified in the coming years? Is a change in the law on this subject planned within the next two years? And is it planned to implement a new law that is fully prepared for the online financial market of the 21st century? The deadline for dealing with this inquiry was 7 November 2018. The answers to these questions largely referred to the tasks of the FinTech Regulatory Council.

In early 2019, the Federal Ministry of Finance created a proposal for an Amendment of the Financial Market Authority Act introducing a regulatory sandbox.58 This concept – on the basis of a similar concept introduced by the British Financial Conduct Authority – enables fintech companies to test their business models under the supervision of the FMA. After receiving a licence for the regulatory sandbox, licences required for the actual exercise of the business model can be applied for separately. The FMA will provide support during this process. This enables business models from the cryptocurrency sector to be tested in advance in a protected environment. Miners, as well as exchanges, could use the regulatory sandbox to test their business model in compliance with regulatory requirements and by receiving assistance from the FMA. The proposal has not entered into force yet as the legislative procedure is ongoing.


1 Nicholas Aquilina is an attorney and Martin Pichler is a senior associate at Brandl & Talos Rechtsanwälte GmbH.

2 Rericha/Aquilina, 'Initial Coin Offering: Ein Fall für die FMA?', ecolex 2017, 1116.

3 Directive (EU) 2018/843 amending Directive (EU) 2015/849 (Amendments to the Fourth EU Anti-Money Laundering Directive).

4 Section 2 Paragraph 21 Ministerial Draft on the Federal Act amending the Financial Market Anti-Money Laundering Act; Article 1(2) Letter d of Directive (EU) 2018/843 amending Article 3(18) of Directive (EU) 2015/849 (Amendments to the Fourth EU Anti-Money Laundering Directive).

5 Kisslinger in Fenyves/Kerschner/Vonkilch (Hrsg), Großkommentar zum ABGB – Klang Kommentar – Sections 285 to 352 ABGB Sachenrecht I, third edition (2011) Section 292(1).

6 Eccher/Riss in Koziol/Bydlinski/Bollenberger (Hrsg), Kurzkommentar zum ABGB, fifth edition (2017) Section 292(1).

7 Aquilina/Stadler, 'E-Commerce-Transaktionen im B2C Bereich' in Eberwein/Steiner (Hrsg), Bitcoins, 98–99.

8 Völkel, 'Privatrechtliche Einordnung virtueller Währungen', ÖBA 2017, 385 (387).

9 Rericha/Aquilina, 'Initial Coin Offering: Ein Fall für die FMA?', ecolex 2017, 1116 (1117).

10 Falschlehner/Klausberger, 'Zur finanzmarktrechtlichen Einordnung von Bitcoins' in Eberwein/Steiner (Hrsg), Bitcoins, 38–39.

11 Welser, Fachwörterbuch zum bürgerlichen Recht, 219–220.

12 Section 1 Euro Act covers banknotes denominated in euros as well as coins and collector coins denominated in euros or cents.

13 Aquilina/Stadler, 'E-Commerce-Transaktionen im B2C Bereich' in Eberwein/Steiner (Hrsg), Bitcoins, 103–104.

14 Aicher in Rummel/Lukas, ABGB, fourth edition, Section 1046(3) (status: 1 May 2017, rdb.at).

15 In Section 2(21) of the Ministerial Draft on the Federal Act amending the Financial Market Anti-Money Laundering Act, virtual currencies are referred to as 'Tauschmittel'.

16 Article 1(2)(d) of Directive (EU) 2018/843 amending Article 3(18) of Directive (EU) 2015/849 (Amendments to the Fourth EU Anti-Money Laundering Directive); Section 2(21) Ministerial Draft on the Federal Act amending the Financial Market Anti-Money Laundering Act.

17 Directive 2009/65/EC.

18 Explanatory notes to the AIFMG (ErläutRV 2401 BlgNR XXIV. GP 3).

19 Majcen, 'Bitcoins und andere virtuelle Währungen . . . bald eine neue Anlageklasse im modernen Asset Management?', ÖBA 2017, 691 (695).

20 FMA FAQ on the application of the AIFMG (status: August 2018).

21 Gorzala/Hanzl, 'Mining – Bergbau oder doch alternatives Investment in das Schürfen von Kryptowährungen?', ÖBA 2018, 560.

22 Directive 2014/65/EU.

23 Lorenz/Zib in Zib/Russ/Lorenz (Hrsg), Kapitalmarktgesetz (2008) Section 1(37) ff.

24 Zib/Russ/Lorenz in Zib/Russ/Lorenz (Hrsg), Kapitalmarktgesetz (2008) Section 1(30).

25 Kalss/Oppitz/Zollner, Kapitalmarktrecht, second edition (2015) Section 11(17).

26 Regulation (EU) 2017/1129.

27 Paulmayer, 'Initial Coin Offerings (ICOs) und Initial Token Offerings (ITOs) als prospektpflichtiges Angebot nach KMG?', ZFR 2017, 532.

28 Piska/Völkel, 'Kryptowährungen reloaded – auf dem Weg aus dem Bermuda-Dreieck', ecolex 2017, 816 (816 f).

29 Federal Administrative Court decision of 29 July 2014, W148 2000409-1 = ZFR 2015/119.

30 Paulmayer, 'Initial Coin Offerings (ICOs) und Initial Token Offerings (ITOs) als prospektpflichtiges Angebot nach KMG?', ZFR 2017, 532.

31 ibid.

32 Lorenz in Zib/Russ/Lorenz (Hrsg), Kapitalmarktgesetz (2008) Section 1(31) f.

33 FMA FinTech Navigator on ICO (https://www.fma.gv.at/querschnittsthemen/fintechnavigator/initial-coin-offering/; accessed on 24 June 2019).

34 Supreme Administrative Court decisions of 22 February 2006, 2005/17/0195; 4 September 2008, 2008/17/0034.

35 Waldherr/Ressnik/Schneckenleitner in Dellinger (Hrsg), Bankwesengesetz (8. Lfg 2016) Section 1(23).

36 Waldherr/Ressnik/Schneckenleitner in Dellinger (Hrsg), Bankwesengesetz (8. Lfg 2016) Section 1(25).

37 Oppitz in Chini/Oppitz (Hrsg), BWG – Bankwesengesetz Section 1(10); Schrank/Meister, 'Cash Pooling im Lichte des BWG', ZFR 2013, 257.

38 Oppitz in Chini/Oppitz (Hrsg), BWG – Bankwesengesetz Section 1(10).

39 Rericha/Aquilina, 'Initial Coin Offering: Ein Fall für die FMA?', ecolex 2017, 1116 (1119) with further references.

40 Seggermann in Brandl/Saria (Hrsg), WAG 2018, 2nd edition, Section 1(86).

41 Leixner, Zahlungsdienstegesetz/E-Geldgesetz 2010 (2011) Section 1(5).

42 Rericha/Aquilina, 'Initial Coin Offering: Ein Fall für die FMA?', ecolex 2017, 1116 (1117).

43 Majcen, 'Bitcoins und andere virtuelle Währungen bald eine neue Anlageklasse im modernen Asset Management?', ÖBA 2017, 691.

44 Rericha/Aquilina, 'Initial Coin Offering: Ein Fall für die FMA?', ecolex 2017, 1116 (1119).

45 For example, Völkel (1/SN-137/ME XXVI. GP – Comment on Ministerial Draft) criticises that virtual currency is defined as the representation of a value that is 'accepted' as a means of exchange. This definition would only be based on actual acceptance, as is the case with Bitcoin or Ether. However, a coin issued during an ICO would not be accepted and therefore not be covered by this definition. A similar argument can be made as regards the representation of a 'value' as it may also be questionable whether coins issued at the very beginning of an ICO already have a value.

46 Section 1 Ministerial Draft.

47 Section 2(22) Ministerial Draft.

48 Section 17(1) FM-GwG.

49 Piska/Völkel, 'Mining als Alternativer Investmentfonds? Angenommen, die FMA hat Recht . . .', ecolex 2018, 703.

50 Rirsch/Tomanek/Wintersberger, 'Mining von Kryptowährungen im Anwendungsbereich des AIFMG', ecolex 2018, 699 (702).

51 Article 1(2)(d) of Directive (EU) 2018/843 amending Article 3(18) of Directive (EU) 2015/849 (Amendments to the Fourth EU Anti-Money Laundering Directive); Section 2(21) Ministerial Draft.

52 CJEU, 22 October 2015, C-264/14, Hedqvist.

53 Ponesch-Urbanek/Beer, 'Kryptowährungen im Experten-Check', ögwthema 2017 H 4, 16; CJEU, 22 October 2015, C-264/14, Hedqvist.

54 Austrian Ministry of Finance, https://www.bmf.gv.at/presse/LoegerKryptowaehrungen.html (accessed on 29 August 2018).

55 Austrian Ministry of Finance, https://www.bmf.gv.at/presse/fintech_beirat.html (accessed on 29 August 2018).

56 'Anfragebeantwortung des Bundesministers für Finanzen', AB 382 XXVI. GP 2.

57 Stenographic record of the National Council, XXVI.GP, 31st Meeting, 14 June 2018, p. 120.

58 Austrian Ministry of Finance, https://www.bmf.gv.at/presse/FinTech.html (accessed on 24 May 2019).