Anonymous cryptocurrency trading is on the verge of death following a unanimous decision by the member states of the European Union Tuesday, May 16, 2023.
Finance ministers of member states met in Brussels where they deliberated on the future of crypto assets in EU and the need to protect their citizens and their sovereignty.
The European Parliament had earlier given its approval in April.
EU states consented that the time is ripe to have the first comprehensive set of rules to regulate cryptocurrencies.
The new rules might negate the purpose of proponents of Bitcoin and Crypto assets which propagate anonymity, but EU states that receive the approval of the European Parliament pointed out that beaming its searchlight on crypto trading will not only protect users but also drastically reduce tax evasion.
10 takeaways for crypto stakeholders in the EU
For crypto buyers, sellers, and owners of exchanges, here are the 10 takeaways from the Crypto rules rolled out by the EU States:
1) The regulation is specifically designed to protect European investors in crypto assets.
2) The crypto regulations by the EU states came at a time exchanges are collapsing, the recent being FTX and how its founder was culpable in the loss of depositors’ funds and LUNA leading to millions of dollars in losses, though LUNA planned a recovery plan which failed woefully.
3) It is to prevent corrupt individuals from using crypto to launder money across borders.
4) To drastically reduce the use of crypto as a means of financing terrorism.
This is amplified by Sweden’s Finance Minister Elisabeth Svantesson:
“Recent events have confirmed the urgent need for imposing rules which will better protect Europeans who have invested in these assets, and prevent the misuse of crypto industry for the purposes of money laundering and financing of terrorism”
5) Cryptocurrency exchanges will be mandated to disclose the identities of their users.
6) Obtaining an operation licence will now be mandatory for crypto firms that want to operate in the 27 EU countries.
7) There will no longer be anonymity of crypto trading in the EU states because regulatory agencies will be more backed by law to trace trading that raises suspicion.
8) By the latest crypto rules by EU States, profits will be easier to tax. This means issues of tax evasion will be minimised.
9) The new rules will be rolled out from 2024
10) To even simplify the identity of traders, ministers agreed that from January 2026, crypto exchanges will obtain the name of senders and beneficiaries of crypto assets irrespective of the amount being sent.
What does this mean in the long term?
Countries around the world, including the United States might follow suits by coming up with transparency in crypto trading.
Countries like Nigeria which restricted users in February 2021 might copy the EU rules for a better trading as the country to reality with the digital world.
Recently, Nigeria’s Security and Exchange Commission or SEC hinted that it’s looking into guidelines on Crypto assets.
The high point of the meeting was the agreement on amending rules on how member countries cooperate with each other in taxation to cover transactions in crypto-assets.
If you operate or offer crypto assets-related services, be warming up to abide by the new crypto regulations by the EU States.