EU approves crypto regulatory framework for Bitcoin, NFTs, and more
The wait is over: Europe gets its own crypto regulatory framework.
The wait is over: Europe gets its own crypto regulatory framework. Some of the rules are strict, but the sector can breathe a sigh of relief.
EU: MiCA crypto regulation framework takes effect
The European regulatory thriller ended last week. Since last Thursday the comprehensive regulatory framework for cryptocurrencies Markets in Crytpo-Assets (MiCA) has come into force. This ends a years-long debate in the European Parliament and among member states. First thing to say: the highly controversial climate-policy-driven ban on proof-of-work services is not part of the final regulation. If Bitcoin remains allowed in Europe, its ownership and trading in the EU will in the future be subject to uniform rules, with compliance overseen by the European market watchdog ESMA. MiCA also includes rules for stablecoins. Issuers of these must hold the necessary reserves to back their tokens’ stability. On climate policy, the regulation places responsibility on crypto-service providers—and not on the cryptocurrencies—to disclose the environmental footprint of their assets. The regulation does impose new duties on the European crypto industry, but it also offers the long-awaited legal certainty. For now, NFTs are exempt.
Crypto service providers must in the future collect transaction data
Parallel to MiCA Brussels reached an agreement on the Transfer of Funds Regulation (TFR), which in crypto circles is no less controversial. With this package, the EU implements measures against the financing of terrorism and money laundering in the Bitcoin sector. The rules are strict because Bitcoin exchanges must collect data for every crypto transaction — regardless of amount. The ban on so-called "unhosted wallets" that do not belong to a crypto service provider, is on the other hand off the table. This means the European DeFi sector also has a future. For transfers over 1000 euros to or from such a wallet, bitcoin exchanges will instead need to verify once that the wallet belongs to their customer. For transfers with third-party "non-hosted wallets" risk-reducing measures are also planned. The sector can therefore eventually live with the TFR, but data-privacy concerns remain.
Russia decides on crypto tax rates
On the other side of the front line between the West and Russia progress is also being made with crypto regulation. Russia, hit by sanctions and increasingly isolated since the invasion of Ukraine, is under pressure to craft a legal framework for crypto trading. With a new tax law, the Duma last week laid down a key piece of this regulatory mosaic. Crypto issuers and operators of information systems underlying crypto services will in the future be exempt from VAT. Moscow is also moving away from the previous flat 20 percent tax on crypto winnings when it comes to income tax. In the future domestic companies would pay 13 percent income tax initially and 15 percent above a certain threshold. The 15 percent rate also applies to foreign firms. The state news agency RIA described the independent tax regime as "one of the main prerequisites for the effective functioning of the digital economy," referencing government circles.
SEC boss: Bitcoin is not a security
Gary Gensler, head of the U.S. Securities and Exchange Commission (SEC), is considered a crypto skeptic. His framework argument: many of the smaller altcoins are actually securities, their issuers trade with them without authorities’ permission. But with cryptocurrency Bitcoin he sees it differently. He proved that last week in an interview with CNBC. There he described Bitcoin as a commodity and distinguished BTC from all other cryptocurrencies. The community reacted with relief, as this suggests BTC is on track for clarity in US regulation.
