The European Union (EU) is working hard to maintain control over the crypto market. Crypto companies will be forced to report users’ crypto holdings to tax authorities this time around by the supranational organization. EU lawmakers are trying to regulate this fast-growing industry by implementing this latest measure.
The EU wants companies to disclose users’ crypto holdings
European Union citizens who hold crypto assets on online platforms (including exchanges) may soon have their holdings reported to tax authorities. This is according to a proposed Administrative Cooperation Directive. covers a wide range of assets, including digital assets like Bitcoin, Ethereum, and Litecoin, stablecoins like Tether (USDT), and derivatives.
The surprising aspect of this draught is that it refers to companies registered not only in the European Union but also in other jurisdictions. The primary goal is to reduce tax evasion at the EU level while increasing tax collection efficiency. At the same time, EU authorities believe that a large number of users are operating anonymously across multiple platforms. These users can make significant profits (sic) by trading digital assets without informing their local tax authorities.
“This is not acceptable,” said EU Commissioner for Tax Paolo Gnetiloni. Of course, the crypto community is concerned about a variety of issues. How would the EU compel companies in other jurisdictions to share users’ private information with tax authorities in multiple EU countries? Furthermore, exchanges may soon begin to request additional information from clients, potentially increasing the risk to individuals.
Multiple crypto exchanges have previously experienced leaks that resulted in private information from users being shared with malicious third parties. As a result, it is critical for crypto companies to ensure that they only collect the information that is required.
This follows numerous discussions about the EU’s Markets in Cryptocurrency Assets Regulation (MiCA), which will be applied to the crypto market as soon as the next few years. As a result, it is critical to monitor the latest developments emanating from the European Union, as this is one of the first regions to implement stringent reporting requirements for the crypto industry.