European Crypto Firms Urge EU to Reconsider New Regulations

The European Union has been asked by more than 40 crypto businesses to reconsider plans to require firms to disclose transaction details.

In a letter sent to 27 E.U. finance ministers last week, the firms implored government officials not to increase the regulatory burden on crypto businesses and to stop decentralized finance applications from requiring registration as legal entities to prevent financial crimes.  

Coinbase Global opposes the new regulations that, in part, would compel companies to collect information on anyone involved in virtual currency transactions. 

The 46 crypto bosses said that the new proposals would “put every digital asset owner at risk” by revealing their wallet addresses. Paul Grewal, Coinbase’s Chief Legal Officer, argued last month that cash is by far the most used instrument in financial crimes. 

European regulations hinder growth

The letter, organized by CoinShares CEO Jean-Marie Mognetti and Diana Biggs of DeFi Technologies, bemoaned the complexity of European crypto regulations compared with other jurisdictions. “There hasn’t been strong enough or coordinated efforts across our industry in Europe,” said Biggs.

The letter also argues that stablecoins should not fall under the Regulation on Markets in Crypto Assets, or MiCA, proposed by the European Commission, which is expected to dramatically affect the growth of the cryptocurrency market in Europe. The 168-page regulation is largely aimed at preventing the misuse of digital assets.

No global regulatory strategy yet

There is no globally coordinated standard for cryptocurrency regulations, despite there being 18,142 cryptocurrencies in circulation and 460 cryptocurrency exchanges globally. 

Recently, in the U.S., President Joe Biden ratified an executive order to engage different government departments to synthesize a framework for digital asset regulation. 

The new framework will encompass “privacy, security, financial inclusion, global competitiveness,” according to Jeremy Allaire, CEO of stablecoin issuer Circle.

In India, the government has altered existing laws to accommodate crypto, but the UAE and Europe have taken a divergent approach, proposing new regulators to deal with crypto.

Countries like El Salvador allow bitcoin to be used as legal tender. There are no taxes on capital gains in the Central American country. Portugal is a famous crypto-haven, charging income tax but no capital gains tax, or taxes on trading.

 A macroeconomic study of the impacts of virtual assets has been undertaken by the World Economic Forum to help coordinate global regulation efforts.