EU: Bitcoin regulatory framework MiCA stands
The European regulatory thriller came to an end last week. Since last Thursday, the comprehensive crypto regulatory framework Markets in Crytpo assets (MiCA) has been in place. This concludes a multi-year debate within the European Parliament and between the member States. The most important thing in advance: the highly controversial, climate-politically motivated ban on proof-of-work services is not part of the finished regulation. If Bitcoin remains permitted in Europe, its ownership and trading in the EU will be subject to uniform rules in the future, which the European market supervisory authority ESMA will monitor. MiCA also contains guidelines for stablecoins. The issuers of the latter are obliged to have the necessary reserves to ensure the stability of their tokens. In terms of climate policy, the regulation requires crypto service providers – and not cryptocurrencies – to report the environmental balance of their assets. Although the regulation burdens the European crypto industry with new tasks, it also provides it with the long-awaited legal certainty. Only NFTs are exempt for the time being.
Crypto Service Providers Will Have to collect transaction data in the future
Parallel to MiCA, an agreement was reached in Brussels on the Transfer of Funds Regulation (TFR), which is no less controversial in crypto circles. With this set of rules, the EU is implementing measures against terrorist financing and money laundering in the Bitcoin space. The rules are tough, because Bitcoin exchanges have to collect data for every crypto transaction – regardless of the transaction size. The ban on so-called “unhosted wallets” that do not belong to a crypto service provider, on the other hand, is off the table. This means that the European DeFi sector also has a future. For transactions of more than 1,000 euros to or from such a wallet, Bitcoin exchanges must instead check once whether the wallet belongs to their customer. Risk-reducing measures are also provided for transactions with “unhosted wallets” owned by third parties. Even with the TFR, the industry can ultimately live with it, but the data protection concerns remain.
Germany sets the future momentum for the financial sector
Apart from the European crypto debate, there is also a lot going on on the regulatory front in Germany. On 29 June, Federal Finance Minister Christian Lindner and Federal Justice Minister Marco Buschmann presented their planned future financing law. The two FDP ministers want to prepare the domestic financial sector for the challenges of the future. Access to the stock market is to be simplified for companies and private individuals. In addition, the planned legislative package also wants to promote the digitization of the securities business. This also holds growth opportunities for the German crypto industry. For example, the law on digital securities is to be extended and the paper requirement for the documentation of stock transactions is to be expanded. The adoption of the law is already planned for 2023.
Russia Adopts Crypto Tax Rates
On the other side of the front line between the West and Russia, the regulation of Bitcoin and Co. is also making progress. Russia, which has been hit by sanctions since the attack on Ukraine and is increasingly isolated economically, is working under high pressure on a legal framework for crypto trading. With a new tax law, the State Duma set an important piece of this regulatory mosaic last week. Issuers of cryptocurrencies and the operators of information systems that underlie crypto services will be exempt from VAT in the future. Moscow is also moving away from the previous flat rate of 20 percent on crypto profits when it comes to income tax. Instead, domestic companies would have to pay income tax of 13 percent initially and 15 percent above a certain amount in the future. The rate of 15 percent also applies to foreign companies. The state-owned Ria News agency described the independent tax regime as ”one of the most important prerequisites for the effective functioning of the digital economy,” referring to government circles.
SEC chief: Bitcoin is not a security
Gary Gensler, head of the US Securities and Exchange Commission (SEC), is considered a crypto skeptic. His prime argument: Many of the smaller altcoins are actually securities, their issuers trade them without the permission of his authority. But at least with the crypto reserve currency Bitcoin, Gensler sees the matter differently. He demonstrated this in an interview with the CNBC television channel last week. There, Gensler described Bitcoin as a commodity, while he distinguished BTC from all other cryptocurrencies. The community reacted with relief, because it suggests that BTC in the USA is on the way to regulatory clarity.