Country overview

Iceland is a small island state in northern Europe. The legal status of cryptocurrency here is unclear despite the great popularity of mining.

  Iceland has a safe place security level according to our rating. Jurisdiction has 75.0 points (from 100) for safety level in Numbeo crime rating (1). The homicide level (2) is 0.5 per 100,000 inhabitants a year. Level of firearm-related death (3) 0.07 per 100,000 inhabitants a year.  

Crypto might be deemed (4) foreign exchange transactions between residents and non-residents without an intermediary in a financial undertaking, which would make it at least in theory prohibited. However, crypto transactions are de facto allowed in Iceland. The national central bank hasn’t said anything about the standing of cryptocurrencies under these restrictions and the government has never expressed the will to go after crypto users.

No regulation for crypto salaries in Iceland. However, they are de facto possible based on MiCA and EEA crypto regulation framework.

Surprisingly given the popularity of mining in the country the legal status of cryptocurrency there remains unclear. After the 2008 financial crisis (5), the Icelandic government adopted strict financial controls that could jeopardize the future of crypto. During the financial crisis, the Icelandic economy went bankrupt, forcing the government to realize controls on how citizens spend their money.

Laws were passed that stopped citizens from taking foreign money out of the economy to prevent it from collapsing. The regulation also performed as an indirect ban on BTC as it resulted in a big capital from the Icelandic economy. However, we would be more correct in stating that the use of Bitcoin was in a gray area. The ban was never applied to digital currencies so the regulation regarded crypto only on paper.

However, that changed in 2017. The Icelandic Central Bank (6) lifted the rule forbidding the outflow of foreign assets from the country. This essentially canceled the indirect ban on crypto as cross-national currency transfers are completely legal today. However, there are still limitations existing. For starters, investors are required to notify the Icelandic Central Bank

Iceland faces limited ML/TF risks from its small VASP sector but could potentially be exposed to increasing risks with the recent expansion in the scale of VASP activity. According to the authorities, the VASP sector in Iceland is tiny comprising three(7) VASPs serving an overwhelmingly domestic customer base.

  The headline PIT rate is 31.8, plus municipal tax and the Headline CIT rate is 20% according to PWC taxsummaries (8). Corporate capital gains in Iceland are subject to the normal CIT rate (20%) based on PWC(8).  

1)👉🏻Crime Index by Country 2023 Mid-Year

2)👉🏻List of countries by intentional homicide rate

3)👉🏻List of countries by firearm-related death rate

4)👉🏻Crypto In Iceland. Article

5)👉🏻2008–2011 Icelandic financial crisis. Wikipedia

6)👉🏻Minutes of the Financial Stability Committee meeting of December 2023. Article

7)👉🏻FINANCIAL SECTOR ASSESSMENT PROGRAM TECHNICAL NOTE ON ANTI-MONEY LAUNDERING/COMBATING THE FINANCING OF TERRORISM. PDF file

8)👉🏻PWC Taxsummaries. Iceland