Back to Index of Cryptoasset Regulations

Sweden has not adopted legislation that specifically addresses cryptoassets. However, the European Union’s Fifth Anti-Money Laundering Directive, which Sweden must implement before January 10, 2020, includes provisions on cryptocurrencies.

The applicability of Swedish rules and legislation on cryptoassets depends on the use of the asset. Sweden regulates financial services, money laundering, and taxation. Cryptoassets may be subject to any of these provisions.

 The sale of virtual currencies is exempt from value-added tax. Purchases of virtual currencies as an investment are subject to capital gains tax—i.e., profits are taxable and losses deductible.

I. Approach to Assets Created Through Blockchain

Sweden does not currently regulate cryptocurrencies or cryptoassets specifically. However, a number of rules and regulations may still be applicable. For instance, if the cryptoasset activity qualifies as an activity that must be reported to the Finance Authority (Finansinspektionen) it is also subject to the law on money laundering.[1] Moreover, as discussed below, the European Union’s (EU’s) Fifth Anti-Money Laundering Directive needs to be implemented in Sweden by January 10, 2020, and that Directive includes provisions on virtual currencies.[2] Thus, although no legislation pertaining to the Fifth Anti-Money Laundering Directive is currently pending in Parliament, Sweden will have to adopt legislation that specifically addresses cryptoassets in the near future.

A. Currency

The Swedish Central Bank has unequivocally stated that “[b]itcoins are not money.”[3] The announcement explained that cryptocurrencies are not seen as currencies, referencing a new financial report on cryptocurrencies written by the Central Bank of Sweden staff.[4] Nevertheless cryptocurrencies are de facto used as means of payments.

B. Financial Service

The Swedish Financial Supervisory Authority (Finansinspektionen) has made the determination that cryptocurrencies and digital currencies are subject to its authority, as trade in these items (i.e., offering a site where cryptocurrencies can be bought and sold similar to an exchange) is a financial service (annan finansiell verksamhet) and is thus subject to mandatory reporting requirements.[5]  

In 2017, the Authority issued a report titled The Authority’s Role in Innovation, which among other things described its role in relation to novel concepts such as cryptocurrencies.[6] The report described ICOs as investment products and a means of securing capital.[7] The Authority has issued warnings against the use of ICOs, noting that they are unregulated and not subject to its review.[8] It also referred to the European Supervisory Authority for its interpretation that ICOs may be regulated by the Prospectus Directive, the Markets in Financial Instruments Directive (MiFID), the Alternative Investment Fund Managers Directive (AIFMD), and the Fourth Anti-Money Laundering Directive.[9] The Authority’s 2017 report stated that it is unaware of any Swedish corporation that secures funding through ICOs.[10]

C. Capital Asset

The Swedish Supreme Administrative Court in December of 2018 determined that for tax purposes, bitcoins are capital investments, affirming a prior preliminary judgement from the Swedish Tax Council, noting that bitcoins are not shares, foreign currency, or personal property.[11] It determined that it is not the opinion of the owner but the actual use of the bitcoin that determines whether it is a personal item or a utility coin, or whether it is a capital investment.[12] The court further noted that personal items may have investment properties (i.e., increase in value) but this aspect of the good must not dominate.[13]

The Swedish Enforcement Authority also treats bitcoins as capital assets. In 2014, its representatives announced to Swedish media outlets that it would start to investigate and seize bitcoin holdings as part of collecting funds from indebted individuals.[14] The first seized bitcoins were auctioned off online in 2017.[15]

D. Financial Legislation and Consumer Protection

1. Financial Services Law

As mentioned above, when the sale of cryptoassets is deemed to be a financial service the operator must register with the Financial Authority, provide the Financial Authority with pertinent information, and keep a record of its transactions.[16] It must also take measures to prevent money laundering.[17] If the activity is not registered in accordance with the law the Finance Authority may, under penalty, require that such a registration be completed; if it is not completed the Finance Authority may order that the activity be stopped.[18]

2. Securities Law

Swedish securities law is found in the Act on Trade with Financial Instruments[19] and the Act on Securities Exchange.[20]  

Both bitcoins and ether (generated by the Ethereum platform) are traded as exchange traded notes (ETNs) on the Swedish Stockholm Nasdaq Exchange (Nasdaq OMX Nordic Stockholm).[21] Thus, the Nasdaq OMX Nordic Stockholm exchange allows for speculation in the cryptocurrencies in the same way as speculations in gold or oil.[22] While an ETN is clearly a securities instrument, the law is less clear on whether cryptocurrencies themselves are financial instruments. The bitcoin and ether ETNs are subject to Swedish securities legislation.

In 2017, the Nasdaq Stockholm Disciplinary Committee rendered a decision that ordered the bitcoin company XBT Provider AB to pay a fine of SEK 1,000,000 (approximately US$120,000) for failing to publish annual reports and make its prospectus available online.[23]

3. General Consumer Protection Law

A statement by Minister for Financial Markets Per Bolund indicates an interpretation that general consumer protection laws would not apply when the good or service has been purchased with the use of bitcoins or another cryptocurrency.[24] He further advised caution in the use of cryptocurrencies by citizens, as they are largely unregulated and carry risk.[25] Also, the Financial Authority has indicated that consumer protections would not apply to ICOs.[26]

E. Anti-Money Laundering Law

If subject to the Financial Authority, providers of cryptoassets will also be subject to the Swedish Money Laundering Act.[27] The Swedish Money Laundering Act implemented the EU’s Fourth Anti-Money Laundering Directive.[28] Sweden has yet to implement the Fifth Anti-Money Laundering Directive. That Directive specifically mentions virtual currencies and will require that EU Member States implement its provisions by January 10, 2020.[29]

F. Taxation

1. Mined Bitcoins

In 2015 the Swedish Tax Authority published a guideline on how it would view and tax mined bitcoins and other virtual currencies for the 2014 tax year.[30] Unless specific conditions are met the digital currency mined is considered income from a hobby, and generally tax exempt.[31]

2. Capital Property

As mentioned above, cryptoassets that are purchased as investments are treated as capital property—i.e., any gain or loss upon realization of the asset is either taxable or deductible.[32]

3. Value-Added Tax

The sale of cryptocurrencies is not subject to value-added tax (VAT). In 2016, the Swedish Supreme Administrative Court declared that sale of bitcoins on an exchange was not subject to VAT in accordance with EU law, as it was considered omsättning av tjänster (supply of services for consideration).[33] This confirms a previous Tax Authority preliminary judgment.[34] The Swedish Skatterättsnämnd (Swedish Tax Board) issued a preliminary ruling in 2013 on VAT and cryptocurrencies, stating that trade in cryptocurrencies  is not subject to Swedish VAT, but is instead subject to Financial Supervisory Authority regulations and treated as a currency. The decision was appealed by the Swedish Tax Authority.[35]  The Swedish Administrative Supreme Court ruled that bitcoins and similar cryptocurrencies are not subject to VAT.[36] That decision was rendered following a preliminary judgment from the Court of Justice of the European Union holding that cryptocurrencies are exempt from VAT.[37]

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II. Custodianship of Cryptocurrencies by Financial Institutions

No specific legislative provisions governing custodianship of cryptocurrencies or other cryptoassets exist under Swedish law.

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III. Regulations of Cryptocurrencies as Financial Securities

Cryptoassets that would qualify as financial securities (compare Part I(A), above) are subject to the financial securities legislation.[38] Specifically, the corporation issuing an ICO would be required to register offerings and disclose information about the corporation.[39] The Financial Authority must also approve the corporation’s bylaws.[40] According to a study by the Swedish Police, none of these types of filings and records are typically performed or kept.[41]

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IV. Treatment of Cryptoassets Not Considered Securities

As mentioned above, cryptocurrencies or crypto-tokens for personal use are typically not considered securities but investment capital, and thus subject to investment capital gains tax (with the ability to deduct losses) upon sale.[42] Because they are generally treated as capital assets this also means that they are subject to enforcement measures and can be seized in  bankruptcy or in connection with illegal activity.[43]

Stealing cryptoassets would also be subject to criminal law. Using cryptoassets or ICOs to defraud someone is also subject to criminal sanctions for fraud, but is not a crime on its own, and because of the anonymous nature surrounding the ownership of cryptocurrencies generally cannot be successfully investigated by police.[44]

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V. Distinctions in Treatment of Different Categories of Cryptocurrencies

As Swedish law does not specifically mention cryptoassets it also does not prohibit a certain form of cryptoassets. As seen above, different laws and regulations will apply to different types of cryptoassets, based on their use.

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Prepared by Elin Hofverberg
Foreign Law Specialist
April 2019

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Last Updated: 07/24/2020