EU’s Crypto Legal Framework Inches Towards Law With Finance Ministers’ Sign-Off

Landmark new crypto rules were signed off on Tuesday by finance ministers of the European Union (EU).

The EU’s Council, which represents 27 member states, unanimously approved the Markets in Crypto Assets regulation (MiCA), making the bloc set to be the first major jurisdiction in the world with a crypto licensing regime. It also agreed new anti-money laundering measures on crypto funds transfers.

“I am very pleased that today we are delivering on our promise to start regulating the crypto-assets sector. Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets, and prevent the misuse of crypto industry for the purposes of money laundering and financing of terrorism," said a statement from Elisabeth Svantesson, minister for finance of Sweden, who chaired the talks as Council Presidency.

Agreement to the laws was largely expected after ambassadors gave a green light to both MiCA and tax measures last week.

MiCA requires crypto firms such as wallet providers and exchanges to seek a license to operate across the bloc, and stablecoin issuers to hold suitable reserves. Its main features were politically agreed in June, but it’s been subject to administrative hold-ups. Major provisions take effect just over a year after it’s published in the bloc’s official journal, which is now likely in June or July.

Later in the day, ministers also agreed on new measures to force crypto providers to disclose details of their customers’ holdings to tax authorities, which will be shared within the bloc in a bid to avoid stashing funds in secret overseas wallets.

"Crypto-assets and e-money have great potential to drive economic activity and innovation – but they also carry risks of reducing transparency and enabling tax evasion or fraud. Updating our tax rules to address these issues will help national administrations to collect tax more efficiently and keep up with evolving technology as Europe moves forward with its digital transition," Valdis Dombrovskis, executive vice-president for an Economy that Works for People, said in a statement.

The new tax rules, known as DAC8, were proposed by the European Commission in December based on a model from the OECD, and the latest draft of the bill was released on Friday. They won’t pass into law just yet as the European Parliament has not given its non-binding opinion on the issue.

Read more: EU Parliament Approves Crypto Licensing, Funds Transfer Rules

Update (May 16, 09:34 UTC): Adds detail and quotes on agreement related to new tax measures throughout the article.