EU Will Force Crypto Reporting on User Holdings CryptoGlobe

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The European Union said on Thursday that it would require cryptocurrency companies to report the holdings of their European users to tax authorities. The proposed Eighth Administrative Cooperation Directive has already been reported on by CoinDesk and could have wide-ranging implications, including requiring non-EU based businesses to register with tax entities.

In a statement, EU Tax Commissioner Paolo Gentiloni said: “Anonymity means that many crypto-asset users making large profits fall under the radar of national tax authorities. This is unacceptable.”

The application of the measures has not been entirely clear, as the cryptocurrency industry has various entities and players residing in various jurisdictions, some of which claim no base of operations. Beyond that, there is the honeypot of user data that registering user assets creates. Often, holdings on centralized exchanges (which are dangerous on their own) are associated with sensitive identifying information that could potentially be used by criminals to tie people to their holdings.

There have been various cases of documented data leaks inside and outside the cryptocurrency industry: and these are just the ones that surface. Requiring companies to provide European tax authorities – including companies based outside the EU – once again forces companies to collect large amounts of data exposing users’ assets and then hand it over to European tax authorities. whom they must trust to protect them.

Concerns have also been raised that it could have ramifications for the EU Regulation on Crypto Asset Markets (MiCA), which is the “first global effort to tackle crypto-assets and brings the rules contained in Mifid, Market Abuse and Prospectus Regulation to the Crypto-Asset Industry,” according to the International Financial Law Review (IFLR).

The European Crypto Initiative issued a statement saying it “concerns it may apply to a much wider range of obligated entities and individuals” than MiCA.

The EU said it believed the move could generate up to $2.5 billion (€2.4 billion) from the introduction of the directive.

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