Anyone who uses virtual coins such as Bitcoin, Ethereum or Ripple in the EU should be able to be identified in the future, regardless of the transaction value. The EU Council of Ministers finally approved such an end for anonymous payments and donations with crypto tokens on Tuesday with the regulation on the transmission of information for money transfers and crypto currencies. With the initiative recently passed by the EU Parliament, anonymous crypto wallets are to be banned and due diligence requirements such as identification requirements are to be extended to the entire sector. The aim is to make the transfer of crypto assets “fully” traceable.
In order to maintain the efficiency of the payment system, the EU Commission initially advocated a de minimis limit of 1000 euros in its draft regulation. The MEPs and the representatives of the member states canceled this limit. According to this, all transfers of crypto assets must contain information about their source and recipient. These must be made available to the competent authorities. The regulations also apply in principle to transactions with “unhosted wallets”, which do not require intermediaries such as stock exchanges or crypto value service providers and form the basis for decentralized financial applications. However, there are a few special provisions.
MiCA regulation approved
The Council also finally confirmed the new Crypto Assets Markets Regulation. These guidelines for “Markets in Crypto-Assets” (MiCA) are intended to protect consumers and investors from abuse and manipulation on volatile crypto marketplaces and to ensure financial stability. In the future, issuers of stablecoins such as Tether or Circles USDC, which are linked to the US dollar, a basket of currencies or other assets, will have to build up a sufficiently liquid reserve at a ratio of 1:1 and partly in the form of deposits in order to prevent total defaults.
Each holder of such tokens is permanently entitled to a free exchange. Furthermore, there is a limit of 200 million euros for transactions with stablecoins per day. Such cryptocurrencies will be controlled by the European Banking Authority (EBA) in the future. A presence of the issuer in the EU becomes mandatory. Providers of wallets for crypto assets of all kinds are liable if they lose investors’ virtual coins. Any market abuse, including insider trading, should be recorded. All providers of services for crypto assets will need a license if they want to operate in the EU. Non-Fungible Tokens (NFTs), which represent the ownership of real objects such as art, music and videos based on crypto coins, are generally excluded from MiCA.
It is urgently necessary “to prevent the misuse of the crypto economy for the purpose of money laundering and the financing of terrorism,” Swedish Finance Minister Elisabeth Svantesson welcomed the completion of the two legislative processes. Today’s decision is also bad news for those who misuse crypto assets for illegal activities to circumvent EU sanctions and finance wars. Both regulations can now come into force after their publication in the EU Official Journal. They then take effect a short time later and no longer have to be transposed into national law.
Crypto exchanges must provide information
The EU finance ministers also have theirs Position on the reform of the Directive on administrative cooperation in the field of taxation staked out. First and foremost, it concerns the reporting and automatic exchange of information about income from transactions with crypto assets and advance notices for the particularly rich. The scope of the previous registration and reporting obligations and the general cooperation between the tax authorities are to be expanded. Included are all crypto assets such as stablecoins, e-money tokens and certain NFTs.
In order to plug loopholes, especially with bitcoins that can be traded across borders, tax authorities are obliged to automatically exchange information about the tax identification number, for example, which providers of crypto services have to provide. Parliament can still comment on this planned “DAC 8” guideline, but cannot have a say in it. The commission commended that users who made profits from crypto assets were no longer “stayed under the radar of national tax authorities thanks to anonymity.”
(sigh)
