According to reports, the European Commission is considering taxing crypto assets to raise around $2.5 billion. A regulated cryptocurrency network and investors located in the EU region will be affected by this directive.
A proposed cryptocurrency taxes directive
According to The Block, a recently leaked draft document indicates a possible upcoming new taxation directive focused on crypto. Crypto taxes alone are estimated to generate $2.5 billion (around €2.4 billion) for the European Commission.
According to reports, the cryptocurrency industry is facing a regulatory gap that can be solved by this proposal. The commission’s end game is to close any tax evasion holes and ensure that all EU member states pay their fair share of taxes. According to leaked reports, the EU commission is likely to adopt the new proposal by the end of the week. While the proposal may already be on its way to approval, applications would begin in early 2025, with the majority arriving in 2026. the new draught proposal incorporates crypto assets into the EU’s administrative cooperation directives.
Cryptocurrency service providers to report
The same directive mandates that crypto service providers report to national tax authorities. The proposed law initially targeted both centralized and decentralized networks. However, the commission’s latest document primarily targets regulated crypto asset service providers.
As a result, all cryptocurrency service providers may be required to report to all national tax authorities. Furthermore, the draught classifies all crypto assets as “decentralized assets, as well as stablecoins and certain non-fungible tokens.” The new directive will only apply if cryptocurrency assets are used for payment or investment purposes. However, this is a directive rather than a legislative regulation. All EU member states can decide on the best way to implement additional provisions.
EU working on MiCA
The European Commission introduced its MiCA proposal in 2020 with the goal of regulating the crypto markets. While the proposal has not yet been approved, reports indicate that voting on the subject will take place in February 2023, with implementation beginning in 2024.
The regulatory framework’s goal is to protect investors and maintain financial stability while allowing for innovation and enhancing the attractiveness of the crypto-asset sector. The authorities believe it will bring more clarity to the EU, as some member states already have national legislation in place for crypto-assets, but there has been no specific regulatory framework at the EU level thus far.