EU Council Gives Final Approval to Landmark Crypto Regulations and Data Sharing Law
The European Union’s (EU) finance ministers have granted final approval to groundbreaking regulations governing the crypto industry, while also agreeing on a new law for sharing data on cryptocurrency tax holdings. These developments position the EU as the first major jurisdiction worldwide to establish a comprehensive licensing regime for cryptocurrencies. Additionally, the approved measures include anti-money laundering provisions for crypto fund transfers.
Elisabeth Svantesson, the finance minister of Sweden and chair of the Council Presidency, expressed satisfaction with the regulatory progress, emphasizing the need to protect European investors in the wake of recent events. The regulations are intended to prevent the misuse of the crypto industry for illicit activities such as money laundering and financing of terrorism.
The Council’s decision to approve the regulations comes as no surprise, as ambassadors had already given their support to the proposed measures last week. The Markets in Crypto Assets regulation (MiCA) requires crypto firms, including wallet providers and exchanges, to obtain licenses in order to operate within the EU. It also mandates that stablecoin issuers maintain suitable reserves. Although the key provisions of MiCA were agreed upon politically in June, administrative delays have hindered its implementation. The regulations are expected to take effect approximately one year after their publication in the EU’s official journal, which is anticipated in June or July.
In addition to MiCA, the finance ministers also reached an agreement on new measures aimed at compelling crypto providers to disclose customer holdings details to tax authorities. The information will be shared within the bloc to prevent funds from being concealed in undisclosed overseas wallets. Valdis Dombrovskis, the executive vice-president for an Economy that Works for People, highlighted the potential of crypto-assets and e-money to drive economic activity and innovation. However, he also acknowledged the associated risks, such as reduced transparency and potential tax evasion or fraud. The new tax rules, referred to as DAC8, were proposed by the European Commission in December, following a model from the OECD. They are yet to become law, pending the non-binding opinion of the European Parliament.
The EU’s final approval of these landmark regulations demonstrates its commitment to regulating and harnessing the potential of cryptocurrencies while addressing associated risks. By establishing a comprehensive licensing regime and enhancing tax regulations, the EU aims to ensure transparency, protect investors, and adapt to the evolving digital landscape. The forthcoming implementation of these regulations will shape the future of the crypto industry within the EU and influence global efforts to regulate digital assets.