The EU will oblige cryptocurrency exchanges to report on customer transactions

According to a draft law that the European Commission will consider next week, crypto providers will have to report the details of their EU customers' transactions to national tax authorities. The new law, which takes into account international standards designed to limit cryptocurrency tax evasion, could apply to stablecoins, derivatives, and NFTs.

«The obligation to report and exchange information on profits earned from investments in cryptocurrency assets will help EU Member States to obtain a complete set of information to collect the proper tax revenues,» the draft bill states.

The current tax rules, known as the Administrative Cooperation Directive, are aimed at preventing users from stashing money in foreign bank accounts for tax evasion purposes. Officials are now concerned that cryptocurrency accounts will provide an alternative route for tax manipulation. This step is also necessary to more closely comply with the financial blockades imposed on Russia in connection with its full-scale military aggression in Ukraine. European Commission officials believe that «crypto assets can be used as a means of avoiding sanctions» that focus on traditional types of funds.

According to the draft law, crypto asset providers will have to collect and verify information about their users, such as names, addresses, social security numbers, and dates of birth, which will then be sent to the tax authorities in the country where the user is resident. The rules will extend beyond the current crypto asset law, known as MiCA, to cover companies offering non-fungible tokens (NFTs) as well as foreign companies that have occasional customers from the eurozone.

It is worth noting that the EU tax bill is expected to be approved at the European Commission meeting on December 7.

Yesterday, on November 30, European Central Bank (ECB) advisors Ulrich Bindseil and Jürgen Schaaf published a joint article in which they predicted that bitcoin would become irrelevant in the near future. Bindseil and Schaaf also advocate not granting any official payment status to BTC. «Since bitcoin does not seem to be suitable either as a payment system or as a form of investment, it should not be legitimized,» the ECB advisors believe.