EU Parliament Pushes For Restriction Of Services From Crypto Firms Operating From Tax Haven Countries

For most lawmakers, the crypto markets are uncharted territories, and as such, it is not surprising that they often choose to err on the side of caution. Consequently, The journey to comprehensive crypto regulation has been a bumpy ride. New information has revealed that the European Commission has reservations against a ban on crypto firms operating from perceived tax havens being pushed by the parliament, citing the risk of breaking trade laws.

A Ban On Crypto Firms Operating From Tax Havens Not Feasible And Could See The EU Flout Trade Laws

As talks on the EU’s crypto regulatory framework, known as the Markets in Crypto Assets Regulation (MiCA), are drawing to a close and the EU works on its final draft, members of the European Parliament have pushed for a restriction on crypto companies operating from perceived tax haven countries. However, according to a document seen by CoinDesk, the European Commission disagrees.

According to the document, such a policy is questionable and puts the EU at risk of breaching trade laws. Furthermore, the paper detailed that no such restrictions were present in other sectors, and it remains unclear why they should apply to the developing crypto market alone. 

The paper argued, “Such a prohibition … might create barriers to the provision of services in the EU,” which, according to the authors, could make up a breach of the EU’s commitments to the World Trade Organization. Meanwhile, breaching International Trade law was not the only concern raised by the commission in the paper.

The report reveals that the EU commission in the paper also did not think that such a policy was feasible. The paper further recommends that the EU address the policy in broader Anti-Money Laundry (AML) regulations if it determines such steps necessary.

“We would urge the [European Parliament] to reconsider and if still deemed necessary await discussions on the AML Regulation,” read the document.

The Bumpy Road To Crypto Regulations

The latest contention in the MiCA draft follows a near ban on PoW cryptocurrencies in a March vote on the MiCA draft. Fortunately, the draft made it to the trilogue stages without those in favor of the ban attempting to reintroduce it into the framework.

While the MiCA draft progresses, crypto industry players and lobby groups also have their sights on a recently approved AML draft currently in its Trilogue stage that could effectively ban non-custodial wallets and breach privacy laws. Presently several concerned groups are lobbying and attempting to educate lawmakers to reverse the provision in its Trilogue talks.

Suppose the EU fails to strike the right balance between user protection and innovation in its regulations. It risks falling behind the competition in what many perceive as the next big technological advancement since the internet. Last week, the head of the bloc’s financial services commission called for a global consensus on regulations pushing for a partnership between the EU and the US.