European Takes Decisive Step Towards Crypto Regulation With DAC8 Approval

Key Points:

• The European Parliament approves DAC8, a major crypto regulation for the EU.
• DAC8 mandates tax reporting for crypto transactions while aligning with international reporting standards.
• This strengthens EU crypto oversight, aligns with international standards, and enhances anti-fraud measures.

In a landmark decision in Strasbourg, France, the European Parliament has taken a significant step toward regulating cryptocurrency by approving the eighth iteration of the Directive on Administrative Cooperation (DAC8).

The move, which received overwhelming support with 535 votes in favor, 57 against, and 60 abstentions, signifies a pivotal moment for crypto-asset regulation within the European Union (EU).

DAC8, an amendment to the EU Directive on Administrative Cooperation (DAC), introduces tax reporting requirements for cryptocurrency transactions across the EU. Under this rule, crypto-asset service providers must report transactions involving EU clients to the bloc’s tax authorities, enabling the automatic exchange of information on crypto assets among EU countries.

This regulatory framework aligns closely with the OECD’s Common Reporting Standard (CRS) and designates two types of entities as reportable crypto-asset service providers (RCASPs): crypto-asset providers and crypto-asset operators.

Importantly, DAC8 follows the enactment of the Markets in Crypto-Assets (MiCA) legislation earlier this year, extending the regulatory framework for crypto-assets in the EU. This measure enhances the EU’s ability to combat tax fraud and evasion in the rapidly growing crypto market.

DAC8 mandates crypto-asset service providers to collect detailed transaction information, covering transfers of crypto-assets of any size, and securely share this data concurrently or before asset transfers. It also aligns with international protocols such as the Crypto-Asset Reporting Framework (CARF) and Anti-Money Laundering and Countering Terrorism Financing (AML/CFT) rules, fortifying mechanisms to combat illegal activities and bolstering the integrity of the European financial system.

The approval of DAC8 signifies a crucial milestone in the EU’s efforts to regulate and oversee cryptocurrency activities, ensuring transparency and compliance across the digital asset landscape.

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