How do cryptocurrencies work in the EU?
Bloomberg News obtained a draft of the EU regulation named MiCa, which stipulates that cryptocurrencies issued or traded in the EU “must be subject to minimum environmental sustainability criteria and set up and manage a phased rollout plan to assure compliance” with these standards.
For example, Bitcoin and Ethereum’s usage of a consensus technique known as Proof of Work (PoW) have been restricted or even banned as a result of a last-minute change in the regulations.
A few Bitcoin business leaders expressed their fears about the new, stronger draft regulation on Twitter on Saturday, fearing that it will effectively outlaw the currency.
“At Ledger, we will always fight for individual liberty and self-determination, especially here at home. One of the world’s leading cryptocurrency wallet providers, Ledger, has issued a public call to action, asking its users to contact their members of the European Parliament and express their opposition to a ban on Bitcoin in Europe.
Legal status of cryptocurrencies in the EU
A legislative proposal to change the Fourth Anti-Money Laundering Directive was proposed by the European Commission on July 5, 2016. These platforms would be required to comply with the AMLD’s due diligence standards, as well as to have policies and processes in place for the detection, prevention, and reporting of money laundering, as well as other types of terrorism funding. They are defined as “a digital representation of value that is not issued by a central bank or a public authority, and is not necessarily attached to any fiat currency, but can be accepted by natural or legal persons as a means of payment and transferred, stored, or traded electronically” in the proposal. European Parliament and Council negotiators agreed on a joint draft on January 29, 2018, which was approved by the committee.
It is also worth mentioning that as the number of people who are interested and involved in the crypto market increases, more and more people start to seek ways to generate cryptos. One of the best ways for them is to gamble with the use of digital currencies. In order to get the most out of Bitcoin gambling, players need to read bitcoin casino reviews, which allows customers to learn more about the way gambling company works. In addition, with the use of these reviews gamblers get important information about the license and legal status of online casinos. It should be stated that there is no specific legislation about controlling crypto gambling. This means, that online gambling in the EU at this rate is legal.
The European Commission also unveiled an Action Plan on FinTech (financial technology enabled by new technologies like blockchain, artificial intelligence, and cloud computing) on March 8 of this year. It includes the newly created EU Blockchain Observatory and Forum, which plans to report on the difficulties and potential of crypto assets later this year and is working on a comprehensive strategy on distributed ledger technology and blockchain that encompasses all sectors of the economy.
Transactions in which a conventional currency is exchanged for bitcoin or another virtual currency and the other way around come within the exemption from value-added tax, as the European Court of Justice (ECJ) decided in its judgment Hedqvist on October 22, 2015.
European Union member states have different restrictions on cryptocurrency exchanges, however, they are all generally deemed lawful in the EU as a whole. The taxation of cryptocurrency also varies, however many member states impose capital gains tax at rates ranging from 0 to 50 percent on income produced from the digital currency.
The future of cryptos in the EU
A long-awaited proposal from the European Commission on cryptocurrencies will be unveiled this fall to make use of the advantages of these tokens powered by networks of computers, including cheaper costs and practically immediate transactions. Regulation of these new payment methods will begin in Europe, where it is expected to have the most impact.
According to Valdis Dombrovskis, the Commission’s executive vice-president for financial services, “I think that Europe is in a position to lead the way on regulation.”
The EU leadership believes that new regulations will attract developers and investors rather than drive them away.
According to Dombrovskis, a lack of legal clarity is frequently mentioned as a major impediment to the development of a viable crypto-assets market in the EU.
The EU aims to attract a $350 billion market spread over more than 6,700 digital currencies by being the first area to put its house in order.
Legislation that not only protects consumers but also encourages innovation is what the European Commission is aiming for with its new rules.
Blockchain’s promise was overshadowed by Bitcoin’s wild trip in the markets. There are many more reasons why authorities throughout the globe are worried about the potential consequences of a Bitcoin frenzy beyond the volatility of these digital assets and their influence on consumers. Bitcoin’s anonymity has made it an ideal payment mechanism for drug traffickers and other criminal enterprises, which has made them cautious of its benefits.
There was a dramatic shift in summer 2019 when authorities in Europe and abroad began making headway in regulating and legislating without killing it.
