Europe has just taken a new step in the regulation of cryptocurrencies with the validation by the European Council of the MiCA (Markets in Crypto Assets) regulation.
The regulation of cryptos
As you know, this bill aims to regulate all activities related to cryptocurrencies. But what is it exactly?
First of all, this regulation provides for closer supervision of companies defined as CASPs (Crypto-Asset Service Providers): they will have legal responsibility for their customers’ cryptos, if they lose them, they will be legally liable. This rule applies to both crypto companies and platform-hosted wallet providers.
The law will also require companies to create a database of users accessing their platforms (#KYC). Byebye the privacy allowed by crypto.
All the same, not to completely darken the picture, the bill does not provide for a ban on mining and Proof of Work cryptos, as had been considered a few months ago.
The regulation of NFTs
Should NFTs be considered as crypto assets? Are they subject to flat tax? Is there a “special” tax regime for NFTs? No answer. Radio silence. It seems that the EU wants to postpone the problem as NFTs are so complex to define legally.
It is true that the term “NFT” is extremely vague: it can be a monkey’s head (# BAYC), a real estate title, or a digital stamp to collect.
Things are unclear regarding NFTs. The tax regime of NFTs is not clearly identified, which leaves a large area of uncertainty.
Depending on the category considered (digital asset? work of art? intangible personal property? etc.), the taxation will not be the same, and neither will the decisions that follow.
This poses a problem for all the actors of the ecosystem: creators, collectors, developers, art galleries…
Although the MiCA bill has been approved by the European Council, it must still be voted on in the European Parliament next week.
The draft law will have to be submitted to the final vote of the European Parliament’s Economic Affairs Committee (ECON), which will take place on Monday, October 10. The new regulation will then have to be approved by the European Parliament in plenary session.
If MiCA is passed, it will be published in the Official Journal of the EU and is expected to come into force in early 2024. Digital Asset Service Providers (DAPs) will then have an additional 18 months to comply with the new regulation. The bill will also have to be translated into the 20 official languages of the EU.
It should also be noted that the bill was published in a complex context with the collapse of the pound and the euro.
In a context where the euro and the pound sterling are collapsing (as well as crypto, admittedly), there is no doubt that the MiCA law will get attention. The official text (380 pages long!) will be studied at length and in depth to understand the ins and outs of this regulation. We will keep you informed.🙂
Coming from a teaching background, I’ve become passionate about the world of Blockchain. I’m eager to learn more and share the fruit of my research through my articles.