European Union mandates crypto service providers to reveal transaction data to fight tax fraud
- The European Commission made the suggestion in order to gain revenue from the crypto trading gains as well.
- The proposed rules would be applicable to both domestic and cross-border transactions.
- The European Union has been looking at implementing crypto regulations as well if the MiCA bill receives approval in February 2023.
European Union is focusing on creating a system for the crypto space in the bloc, which would allow it to oversee every aspect of it. Regulation is certainly central to the process, but as it appears to be, the EU is also planning on reeling in control over trading profits with the help of the European Commission’s new initiative.
European Union on a transparency roll
The European Union proposed a new set of directives that would allow the union to fight tax fraud emerging from the crypto sector. As per the rules, every crypto service provider active within the 27 member countries is mandated to report all transactions involving the citizens of the union.
This move would allow the European Union to also put an end to tax evasion, which is present in the crypto sector. Consequently, transparency in the crypto space is bound to improve and to further the same, the European Union will also implement stricter taxation rules.
The initiative by the European Commission strives to ensure that the citizens of the union pay their taxes on the profits earned by crypto trading. Explaining the same, European Union’s economy commissioner, Paolo Gentiloni, said,
“The cover of anonymity, the fact that there are more than 9,000 different cryptoassets currently available, and the inherent digital nature of the trade means that many cryptoasset users that are making huge profits fall under the radar of national tax authorities.”
To ensure absolute transparency and control over trading gains, the European Commission would apply the directives for both domestic and cross-border transactions. However, the rules which fall under the reporting rules by the Organization for Economic Cooperation and Development will be effective from January 2026.
Recently, as reported by FXStreet, Italy also announced similar taxation on crypto gains starting in 2023. The 26% capital gains will be extended to crypto trading profits if they exceed the 2,000 Euros threshold.
Crypto regulation in the European Union
At the moment, the European Union does not have an established set of guidelines for crypto regulation. However, this is set to change by February 2026 when the Markets in Crypto-Assets or MiCA proposal is scheduled for a final vote.
The proposal would address concerns such as consumer protection service providers’ supervision and environmental safeguards from energy-intensive cryptocurrencies such as Bitcoin.