Regulatory overview – EU decides on crypto regulations for BTC, NFTs and Co.

EU: BTC rulebook MiCA is in place

The European regulatory thriller came to an end last week. The comprehensive set of crypto rules has been in place since last Thursday Markets in Crytpo assets (MiCA). This marks the end of a multi-year debate within the European Parliament and between the member states. The most important thing first: The highly controversial, climate-politically motivated ban on proof-of-work services is not part of the finished regulation. If BTC remains permitted in Europe, its ownership and trading in the EU will be subject to uniform rules in the future, compliance with which will be monitored by the European market surveillance authority ESMA. MiCA also includes guidelines on 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 obliges crypto service providers – and not cryptocurrencies – to state the environmental balance of their assets. Although the regulation burdens the European crypto industry with new tasks, it also gives it 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 one that was no less controversial in crypto circles Transfer of Funds Regulation (TFR). With this set of rules, the EU implements measures against terrorist financing and money laundering in the BTC space. The rules are tough, because BTC exchanges have to collect data for every crypto transaction – regardless of the transaction size. The ban on so-called “unhosted wallets”, which do not belong to a crypto service provider, is off the table. This means that the European DeFi sector also has a future. Instead, for transactions of more than EUR 1,000 to or from such a wallet, BTC exchanges must carry out a one-time verification that the wallet belongs to their customer. Risk-reducing measures are also provided for transactions with “unhosted wallets” owned by third parties. The industry can ultimately live with the TFR, but data protection concerns remain.

Germany provides impetus for the future of the financial sector

Away from the European crypto debate, there is also a lot going on in Germany on the regulatory front. On June 29, Federal Finance Minister Christian Lindner and Federal Justice Minister Marco Buschmann presented their planned Future Financing Act. 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 aims to advance the digitization of the securities business. This also includes growth opportunities for the German crypto industry. The law on digital securities is to be extended and the paper requirement for the documentation of stock transactions is to be expanded. The law is scheduled to be passed as early as 2023.

Russia adopts crypto tax rates

On the other side of the front line between the West and Russia, the regulation of BTC and Co. is also making progress. Russia, hit by sanctions and increasingly economically isolated since the Ukraine attack, is working flat out on a legal framework for crypto trading. Last week, the State Duma created an important part of this regulatory mosaic with a new tax law. Publishers of cryptocurrencies and operators of information systems on which crypto services are based 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 13 percent income tax first and, above a certain amount, 15 percent income tax. The rate of 15 percent also applies to foreign companies. The state-owned news agency Ria News 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 boss: BTC is not a security

Gary Gensler, head of the US Securities and Exchange Commission, 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 Gensler sees things differently, at least when it comes to the key cryptocurrency BTC. He demonstrated that in an interview with CNBC last week. There Gensler described BTC as a commodity, distinguishing BTC from all other cryptocurrencies. The community reacted with relief, because this indicates that BTC is on the way to regulatory clarity in the USA.