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EU states approve world's first comprehensive crypto rules

Published 16/05/2023, 10:50
© Reuters. Representations of cryptocurrency Bitcoin are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration

By Huw Jones

(Reuters) - European Union states on Tuesday gave the final nod to the world's first comprehensive set of rules to regulate cryptoassets on Tuesday, piling pressure on countries such as Britain and the United States to play catch up.

An EU finance minister meeting in Brussels approved rules that were thrashed out with the European Parliament, which gave its approval in April.

The rules are expected to be rolled out from 2024.

Regulating crypto has become more urgent for regulators after the collapse of crypto exchange FTX.

"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," saidElisabeth Svantesson, finance minister for Sweden, which holds the EU presidency.

The rules require firms that want to issue, trade and safeguard cryptoassets, tokenised assets and stablecoins in the 27 country bloc to obtain a licence.

Ministers took steps to combat tax evasion and the use of cryptoasset transfers for money laundering by making transactions easier to trace.

They agreed on a requirement that from January 2026 service providers obtain the name of senders and beneficiaries in cryptoassets, regardless of the amount being transferred.

There was also agreement on amending rules on how member countries cooperate with each other in taxation to cover transactions in crypto-assets, and on exchanging information on advance tax rulings for the wealthiest individuals.

Crypto firms say they want certainty in regulation, putting pressure on countries to copy the EU rules, and on regulators to come up with global norms for a cross-border activity.

Britain has outlined a phased approach, starting with stablecoins and broadening out to un-backed cryptoassets later on, but there is no firm timetable.

The United States has focused on using existing securities rules for enforcement action in the sector while it decides on whether to introduce bespoke new rules and who would apply them.

© Reuters. Representations of cryptocurrency Bitcoin are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration

Hester Peirce, one of the commissioners at the U.S. derivatives regulator CFTC, said last week that a number of federal and state authorities are trying to figure out what oversight role they could play in the crypto sector.

"We are wandering in the desert a bit," Peirce told a conference.

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