EC Council Approve MiCA

24 May 23

The European Union (#EU) has taken a significant step towards enacting a legal framework for cryptocurrencies, as the finance ministers of the member states have given their approval. The Council of the European Union, representing all 27 member states, unanimously endorsed the Markets in Crypto Assets regulation (#MiCA), making the EU poised to become the first major jurisdiction with a licensing system for cryptocurrencies. Additionally, the Council agreed on new regulations to combat money laundering in crypto fund transfers.

The approval of these laws was widely anticipated following the positive response from ambassadors last week. MiCA will require crypto businesses, including wallet providers and exchanges, to obtain a license to operate within the EU. It will also mandate stablecoin issuers to hold appropriate reserves. Although the key provisions of MiCA were agreed upon in June, administrative delays have caused some hold-ups. The regulation is expected to be published in the EU's official journal in June or July, with major provisions taking effect slightly over a year after publication.

Furthermore, the finance ministers reached an agreement on new measures that will compel crypto providers to disclose customer holdings information to tax authorities. This information will be shared among EU member states to prevent the concealment of funds in offshore wallets.

Valdis Dombrovskis, the executive vice-president for an Economy that Works for People, emphasized the need to update tax rules to address the potential risks of cryptocurrencies, such as reduced transparency and possible tax evasion or fraud.

These new tax regulations, known as #DAC8, were proposed by the European Commission in December and are based on an OECD model. However, they have yet to become law as they await the non-binding opinion of the European Parliament.