European Union on Tuesday gave a nod to the first set of rules for cryptocurrency managing firms. These rules will apply to those who want to manage crypto assets. Read this article to know more.
A meeting took place in Brussels to take the final decision about the rules that would be applied if dealing with cryptocurrency. The finance minister of the EU has given a green signal to rules for operating crypto assets.
Following are a few of the topics regarding which rules were approved:
- The rule is to prevent the use of cryptocurrency for tax evasion.
- The rule is to stop the misuse of cryptocurrency for money laundering.
- The rule requires the company wanting to operate (trade, issue, or shield) cryptocurrency to have a license issued to them.
After discussion, the rules were approved by the European Parliament in April. These rules are said to be active in 2024. It is said that from 2026, the service provider of crypto assets need to take the names of parties involved in transaction irrespective of the amount.
There is talk of making rules so that the member countries of the EU can work together to make taxation simple for easy transactions.
The decision to make regulatory measures was a matter of urgency. The decision of setting rules and regulations on the crypto world became necessary for the following:
- One of the most important incidents that triggered the situation was the collapse of the crypto exchange FTX which resulted in heavy losses for many people. It gave rise to the need for rules to operate the crypto assets.
- It is also to protect the interest of people under the EU who have invested in crypto or want to invest in the future.
- The rules were set to put an end to or control the misuse of cryptocurrency for illegal purposes. It includes people using crypto for money laundering, tax evasion, financing terrorism, and more.
Those active in the crypto market want other countries to take such regulatory measures as well. It is so there are global norms for operating crypto across borders with security.
This decision taken by the EU has now put pressure on countries like Britain and the US to take steps forward on making a comprehensive set of cryptocurrency rules.
Britain is said to be opting for a phased approach to set the rules in place. They are starting with stable coins and then on to the un-backed crypto assets. There is no rigid format in place yet.
The US is in talks about using the existing securities rules for crypto assets as well. This decision is temporary to ensure a safe and secure transition and prevent illegal activities. They are currently deciding whether there is a need for new laws. If it is, then who is going to deal with the new rules. Currently, several federal and state authorities in the US are trying to come up with solutions for the current scenario.