The EU’s Council has given its final approval to the groundbreaking regulation called “Markets in Crypto Assets.” Additionally, they have agreed on a new law to share information about taxes on cryptocurrency holdings.
On Tuesday, the finance ministers of the European Union (EU) approved significant new rules for cryptocurrencies. These rules are considered a major milestone in the regulation of digital currencies.
The European Union’s Council, consisting of 27 member states, has given unanimous approval to the Markets in Crypto Assets regulation (MiCA). This makes the EU the first major jurisdiction globally to establish a licensing system for cryptocurrencies. Additionally, the Council has agreed on new measures to combat money laundering related to the transfer of cryptocurrency funds.
Elisabeth Svantesson, the finance minister of Sweden and chair of the Council Presidency, expressed her satisfaction with the decision to regulate the crypto-assets sector. She emphasized the importance of protecting European investors and preventing the misuse of cryptocurrencies for illicit activities such as money laundering and terrorism financing. Recent events have highlighted the urgent need for these rules to safeguard individuals and ensure the integrity of the crypto industry.
The approval of the laws was widely anticipated after ambassadors gave their approval to both MiCA and tax measures last week.
MiCA, which stands for Markets in Crypto Assets, introduces requirements for crypto companies like wallet providers and exchanges to obtain a license to operate within the European Union (EU). Additionally, issuers of stablecoins will be required to hold appropriate reserves. While the main aspects of MiCA were agreed upon in June, administrative delays have slowed down its progress. The significant provisions of MiCA are expected to come into effect approximately one year after its publication in the official journal of the EU, which is likely to happen in June or July.
Later in the day, ministers reached an agreement on new regulations that will require crypto service providers to reveal information about their customers’ cryptocurrency holdings to tax authorities. This information will be shared among EU member states to prevent individuals from hiding their funds in undisclosed wallets located in other countries.
Valdis Dombrovskis, the executive vice-president for an Economy that Works for People, highlighted the potential benefits and risks associated with crypto-assets and e-money. He emphasized the importance of updating tax rules to tackle these risks, such as tax evasion and fraud, while also enabling more efficient tax collection. These updates align with Europe’s digital transition, ensuring that tax administrations can adapt to evolving technology and maintain transparency in economic activities.
The European Commission proposed new tax rules, referred to as DAC8, in December. These rules are based on a model from the OECD (Organization for Economic Cooperation and Development), and the most recent version of the bill was released on Friday. However, they are not yet finalized into law because the European Parliament has not provided its non-binding opinion on the matter.
This information is for general knowledge only and should not be considered as advice for investing or making financial decisions.
Author
