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Czech Republic

Retail_Trading_Status

Allowed-Regulated Unknown
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2025-06-26 13:07
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Executive Summary

In the Czech Republic, individual citizens and residents are legally permitted to buy, sell, and hold cryptocurrencies. The Czech National Bank (CNB) is the competent authority supervising the crypto-asset market, aligning with EU directives like MiCA, which entered into full force on December 30, 2024. The Digital Finance Act (Act No. 31/2025 Coll.) came into force on February 15, 2025, adapting national law to MiCA, mandating licensing and strict AML/KYC requirements for Crypto-Asset Service Providers (CASPs). Income from cryptocurrency transactions is subject to taxation, with exemptions for long-term holdings and small investors.

Key Pillars

The key regulatory pillars include: 1) The Czech National Bank (CNB) as the primary regulator overseeing the crypto-asset market. 2) Core compliance requirements such as AML/KYC/CFT regulations under the Czech AML Act (Act No. 253/2008 Coll.) and Regulation (EU) 2023/1113. 3) Licensing and registration requirements for Virtual Asset Service Providers (VASPs), transitioning to CASPs under MiCA, requiring authorization from the CNB; the Financial Analytical Office (FAÚ) may also require authorization under the AML Act for crypto-assets not covered by MiCA.

Landmark Laws

Markets in Crypto-Assets Regulation (MiCA): Entered into full force on December 30, 2024, establishing a comprehensive regulatory framework for crypto-assets. Digital Finance Act (Act No. 31/2025 Coll.): Came into force on February 15, 2025, adapting national law to MiCA and designating the CNB as the competent authority. Czech AML Act (Act No. 253/2008 Coll.): Requires VASPs/CASPs to conduct due diligence, monitor transactions, and report suspicious activities.

Considerations

Cryptocurrencies are classified as commodities, not legal tender. Income from cryptocurrency transactions is subject to taxation; profits are generally taxed as 'other income' at a rate of 15% (or 23% for higher incomes). However, income from the sale of crypto-assets held for more than three years is now tax-exempt for individuals, and if an individual's total income from crypto-asset transactions does not exceed CZK 100,000 in a calendar year, these transactions are exempt from income tax. The CNB has historically highlighted the risks associated with cryptocurrencies, comparing them to gambling and emphasizing investment risks.

Notes

Entities providing crypto-asset services under a Czech trade license before December 30, 2024, can continue operations under a grandfathering clause until July 1, 2026, if they apply for a MiCA license by July 31, 2025. The Financial Analytical Office (FAÚ) is the financial intelligence unit responsible for overseeing AML compliance. As of December 30, 2024, all VASPs in the Czech Republic are bound by Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain crypto-assets (TFR).

Detailed Explanation

Individual citizens and residents in the Czech Republic are legally permitted to buy, sell, and hold cryptocurrencies. The country's regulatory framework is evolving, aligning with European Union directives, notably the Markets in Crypto-Assets Regulation (MiCA), which fully came into force on December 30, 2024. Historically, the Czech National Bank (CNB) adopted a 'light-touch' approach, classifying cryptocurrencies as commodities rather than legal tender, permitting their use in transactions but not as an official means of payment. Entities providing cryptocurrency-related services were subject to Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations, with the Czech Republic implementing stricter AML rules than required by the EU's AMLD5. This meant that all firms dealing with cryptocurrencies were regulated.

To adapt national law to MiCA, the Czech Republic enacted the Digital Finance Act (Act No. 31/2025 Coll.), which came into force on February 15, 2025. This Act designates the Czech National Bank (CNB) as the competent authority for supervising the crypto-asset market, including Crypto-Asset Service Providers (CASPs), issuers, and entities offering crypto-assets to the public.

Providers of virtual asset services (VASPs), now transitioning to CASPs under MiCA, require authorization. Entities providing crypto-asset services under a Czech trade license before December 30, 2024, can continue operations under a grandfathering clause until July 1, 2026, provided they apply for a MiCA license by July 31, 2025. The CNB is responsible for issuing these licenses. For crypto-assets not covered by MiCA (e.g., unique and non-fungible crypto-assets), authorization from the Financial Analytical Office (FAÚ) may be required under the AML Act.

Strict AML/KYC requirements are in place. VASPs/CASPs are obliged entities under the Czech AML Act (Act No. 253/2008 Coll.) and must identify and conduct due diligence on their customers, monitor transactions, report suspicious activities to the FAÚ, and implement internal AML policies. The FAÚ is the financial intelligence unit responsible for overseeing AML compliance. As of December 30, 2024, all VASPs in the Czech Republic are bound by Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain crypto-assets (TFR).

Income from cryptocurrency transactions is subject to taxation. For individuals, profits from crypto transactions are generally taxed as 'other income' at a rate of 15% (or 23% for higher incomes). However, income from the sale of crypto-assets held for more than three years is now tax-exempt for individuals (non-entrepreneurs). Additionally, if an individual's total income from crypto-asset transactions does not exceed CZK 100,000 in a calendar year, these transactions are exempt from income tax and do not need to be reported. These exemptions generally apply to crypto-assets not included in business assets. Corporate income tax applies to businesses dealing with cryptocurrencies.

While permitting crypto activities, the CNB has historically highlighted the risks associated with cryptocurrencies, comparing them to gambling and emphasizing that investors bear the risk of losing their investments. The implementation of MiCA and the national Digital Finance Act signifies a move towards a more harmonized and robust regulatory framework for crypto-assets in the Czech Republic, aiming to enhance investor protection and market integrity.

Summary Points

Retail Trading of Cryptocurrencies in Czech Republic: Regulatory Overview (June 2025)

1. General Status:

  • Allowed-Regulated: Individual citizens and residents are legally permitted to buy, sell, and hold cryptocurrencies.
  • The regulatory framework is evolving, aligning with EU directives, particularly the Markets in Crypto-Assets Regulation (MiCA).

2. Key Regulatory Bodies:

  • Czech National Bank (CNB):
    • Designated as the competent authority for supervising the crypto-asset market under the Digital Finance Act.
    • Responsible for issuing licenses to Crypto-Asset Service Providers (CASPs) under MiCA.
    • Historically issued warnings about the risks associated with cryptocurrencies.
  • Financial Analytical Office (FAÚ):
    • Financial intelligence unit responsible for overseeing Anti-Money Laundering (AML) compliance for VASPs/CASPs.
    • May require authorization for crypto-assets not covered by MiCA (e.g., unique and non-fungible crypto-assets) under the AML Act.

3. Key Legislation and Regulations:

  • Markets in Crypto-Assets Regulation (MiCA): EU regulation that entered into full force on December 30, 2024, significantly impacting the regulatory landscape.
  • Digital Finance Act (Act No. 31/2025 Coll.): Czech national law that came into force on February 15, 2025, adapting national law to MiCA.
  • Czech AML Act (Act No. 253/2008 Coll.): Imposes AML/KYC obligations on VASPs/CASPs.
  • Regulation (EU) 2023/1113 (TFR): On information accompanying transfers of funds and certain crypto-assets, binding on all VASPs in the Czech Republic as of December 30, 2024.
  • Income Taxes Act (amendment): Provides tax exemptions for individuals under certain conditions.

4. Compliance Requirements:

  • Licensing and Registration:
    • Providers of virtual asset services (VASPs), now transitioning to CASPs under MiCA, require authorization.
    • Entities providing crypto-asset services under a Czech trade license before December 30, 2024, can continue operations under a grandfathering clause until July 1, 2026, provided they apply for a MiCA license by July 31, 2025.
  • AML/KYC:
    • Strict AML/KYC requirements are in place.
    • VASPs/CASPs must:
      • Identify and conduct due diligence on customers.
      • Monitor transactions.
      • Report suspicious activities to the FAÚ.
      • Implement internal AML policies.
  • Taxation:
    • Income from cryptocurrency transactions is subject to taxation.
    • For individuals:
      • Profits are generally taxed as "other income" at a rate of 15% (or 23% for higher incomes).
      • Income from the sale of crypto-assets held for more than three years is now tax-exempt (non-entrepreneurs).
      • If total income from crypto-asset transactions does not exceed CZK 100,000 in a calendar year, these transactions are exempt from income tax and do not need to be reported.
    • Corporate income tax applies to businesses dealing with cryptocurrencies.

5. Notable Restrictions or Limitations:

  • The CNB does not consider cryptocurrencies as legal tender or a monetary unit; they are classified as commodities.
  • The CNB has historically highlighted the risks associated with cryptocurrencies, comparing them to gambling.

6. Recent Developments or Changes:

  • Full implementation of MiCA (December 30, 2024): Significant shift towards a more comprehensive regulatory framework.
  • Enactment of the Digital Finance Act (February 15, 2025): Adaptation of national law to MiCA, designating the CNB as the competent authority.
  • New tax rules (early 2025): Introduction of tax exemptions for long-term holdings and small-scale transactions for individuals.
  • Grandfathering provisions: CASPs operating under a Czech trade license before December 30, 2024, have until July 1, 2026, to obtain a MiCA license, provided they apply by July 31, 2025.

Full Analysis Report

Report on Retail Trading Status of Cryptocurrencies in Czech Republic

Date: 2025-06-26

Topic: Retail_Trading_Status

Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

Retail_Trading_Status: Allowed-Regulated

1. Current Status: Allowed-Regulated

2. Detailed Narrative Explanation:

Individual citizens and residents in the Czech Republic are legally permitted to buy, sell, and hold cryptocurrencies. The country has been developing its regulatory framework, particularly aligning with European Union directives and regulations, most notably the Markets in Crypto-Assets Regulation (MiCA).

Historically, the Czech Republic adopted a relatively "light-touch" approach, with the Czech National Bank (CNB) not considering cryptocurrencies as legal tender or a monetary unit, but rather classifying them as commodities. This meant that while not an official means of payment, their use in transactions was permitted. However, even before the full implementation of MiCA, entities providing cryptocurrency-related services were subject to Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations. The Czech Republic even implemented stricter AML rules than required by the EU's AMLD5, mandating that all firms dealing with cryptocurrencies be regulated.

With the advent of MiCA, which entered into full force on December 30, 2024, the regulatory landscape has become more comprehensive. The Czech Republic has enacted the Digital Finance Act (Act No. 31/2025 Coll.), which came into force on February 15, 2025, to adapt national law to MiCA. This Act designates the Czech National Bank (CNB) as the competent authority for supervising the crypto-asset market, including Crypto-Asset Service Providers (CASPs), issuers, and entities offering crypto-assets to the public.

Key Regulatory Aspects:

  • Legality: Buying, selling, and holding cryptocurrencies by individuals is legal in the Czech Republic.
  • Licensing and Registration: Providers of virtual asset services (VASPs), now transitioning to CASPs under MiCA, require authorization. Entities providing crypto-asset services under a Czech trade license before December 30, 2024, can continue operations under a grandfathering clause until July 1, 2026, provided they apply for a MiCA license by July 31, 2025. The Czech National Bank is responsible for issuing these licenses. For crypto-assets not covered by MiCA (e.g., unique and non-fungible crypto-assets), authorization from the Financial Analytical Office (FAÚ) may be required under the AML Act.
  • AML/KYC Requirements: Strict AML/KYC requirements are in place. VASPs/CASPs are obliged entities under the Czech AML Act (Act No. 253/2008 Coll.) and must identify and conduct due diligence on their customers, monitor transactions, report suspicious activities to the FAÚ, and implement internal AML policies. The FAÚ is the financial intelligence unit responsible for overseeing AML compliance for these entities. As of December 30, 2024, all VASPs in the Czech Republic are bound by Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain crypto-assets (TFR).
  • Taxation: Income from cryptocurrency transactions is subject to taxation. For individuals, profits from crypto transactions are generally taxed as "other income" at a rate of 15% (or 23% for higher incomes). However, significant changes to tax rules came into effect in early 2025. Income from the sale of crypto-assets held for more than three years is now tax-exempt for individuals (non-entrepreneurs). Additionally, if an individual's total income from crypto-asset transactions does not exceed CZK 100,000 in a calendar year, these transactions are exempt from income tax and do not need to be reported. These exemptions generally apply to crypto-assets not included in business assets. Corporate income tax applies to businesses dealing with cryptocurrencies.
  • Official Warnings: While permitting crypto activities, the CNB has historically highlighted the risks associated with cryptocurrencies, comparing them to gambling and emphasizing that investors bear the risk of losing their investments.

The implementation of MiCA and the national Digital Finance Act signifies a move towards a more harmonized and robust regulatory framework for crypto-assets in the Czech Republic, aiming to enhance investor protection and market integrity.

3. Specific, Relevant Text Excerpts:

  • Freeman Law on general status and AML (though some aspects pre-date full MiCA implementation): "In the Czech Republic, cryptocurrencies are largely unregulated. First, they are not regulated as a currency. Rather, cryptocurrencies are classified as commodities... As a member of the EU, the Czech Republic is subject to the EU's AML regulations... The Czech Republic has implemented a stricter legal model than AMLD5 by requiring that every cryptocurrency-related firm be regulated by the Czech government. So, Czech's AML regulations apply to anyone that provides cryptocurrency services..."
  • Gofaizen & Sherle on legality and new MiCA framework: "Yes, cryptocurrency activity is legal and authorized in the Czech Republic. Virtual currencies are regulated by EU law and have no restrictions in the Czech Republic. To set up a cryptocurrency company, it is necessary to register as a Virtual Asset Service Provider (VASP), obtain a crypto license in the Czech Republic, and comply with the AML-KYC requirements... Starting from January 1, 2025, changes in the regulation of cryptocurrency companies in the Czech Republic took effect due to the implementation of the new European legislation, the Markets in Crypto-Assets Regulation (MiCA). All cryptocurrency companies are required to obtain a CASP license." (Note: Some sources indicate MiCA's full effect from Dec 30, 2024, and the Czech adaptation act from Feb 15, 2025).
  • Kinstellar on the Digital Finance Act and CNB's role (February 2025): "On 15 February 2025, Czech Act No. 31/2025 Coll., on the implementation of European Union regulations in the area of financial market digitisation (the Digital Finance Act), came into force. This legislation serves as an adaptation act to the EU MiCA Regulation and introduces significant changes to the regulation of crypto-assets and financial markets. Under the Digital Finance Act, the Czech National Bank has been designated as the competent authority for crypto-assets."
  • Kinstellar on grandfathering provisions (February 2025): "Under the Digital Finance Act, the grandfathering period for CASPs providing services under a Czech trade licence (živnostenské oprávnění) before 30 December 2024 is extended until 1 July 2026, provided that the CASP applies for a licence under the MiCA Regulation by 31 July 2025."
  • Financial Analytical Office (FAÚ) on new AML/CFT framework and MiCA licensing: "From 30 December 2024 there is significant change in relation to the persons providing services related to virtual assets (hereinafter „VASPs“)... Under the new rules, each VASP has to hold a license resulting from a fee-based procedure. In case that entity intends to provide services relating to a virtual assets under the MiCA regulation, it is obliged to apply for a licence from the Czech National Bank under that regulation. The Czech National Bank will be also national competent authority with supervisory powers."
  • WTS Global on new tax rules (January 2025): "An amendment to the Income Taxes Act provides two options for the exemption of income from the sale of crypto-assets for natural persons, non-entrepreneurs... Small investors will appreciate the introduction of a value limit of CZK 100 th (approx. EUR 3,900) of gross revenue from the sale of crypto-assets per year. Provided an investor does not exceed this annual limit, income from the sale of crypto-assets will be exempt from income tax. In addition, capital gains from the sale of crypto-assets held by an investor for more than three years are exempt."
  • CMS Law on AML obligations: "A provider of virtual assets related services needs to follow the local AML rules with respect to services carried out in the Czech Republic. Such provider will be considered an obliged entity under local AML regulations requiring, among others, to do the identification and due diligence of its customers, check the transactions, report the suspicious transactions to the local AML Authority and implement relevant internal AML policies."

4. Direct, Accessible URL Links to Sources:

Web Sources (15)

Sources discovered via web search grounding

Search queries used (7)
  • Retail cryptocurrency trading Czech Republic 2024 2025
  • Czech National Bank cryptocurrency regulation
  • Cryptocurrency laws Czech Republic
  • AML/KYC requirements cryptocurrency Czech Republic
  • Taxation of cryptocurrency Czech Republic
  • Regulation of cryptocurrency exchanges Czech Republic
  • Official statements on cryptocurrency Czech Republic 2024 2025
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