Crypto regulation in the world: weekly digest #15

Europe

The European Parliament has voted to change the tax policy within the EU to include the taxation rules for cryptocurrency transactions. During the last plenary session the lawmakers have supported a resolution setting out a framework to achieve the implementation of blockchain technology in taxation and unify taxation of digital assets. The document was adopted by most of parliamentarians.

The resolution says that digital assets must be a subject of fair and effective taxation. There were discussions concerning a definition of what would be a taxable event, but it was concluded that this might be the conversion of digital assets into a fiat currency.

At the same time, the cross-border nature of crypto assets makes it necessary to obtain information on where this taxable event have taken place. According to the text of the document international tax authorities should, while exchanging information about taxpayers, be sure to have data on crypto assets.

There were added amendments to the document for a simplified tax regime for small transactions. This will allow not to waste resources on monitoring small amount transactions.

We wrote earlier that the European Council has finalized the text of the European Union Markets in Crypto-Assets (MiCA) bill proposal. The next stage will be the consideration of the bill by the European Parliament on 10th of October. In case of a positive decision, the document will be translated into the official languages of the EU member states and published in the Official Journal of the European Union. The document settles an adaptation period of 12-18 months to prepare for the introduction of new laws and the provisions will come into force in the beginning of the year 2024.

It was also confirmed this week that the EU in its eighth set of economic sanctions against Russia has applied ban on providing any crypto services for all Russian citizens. The European Union introduced these measures tightening a previous rule applied in February which limited Russians crypto payments to European wallets to 10,000 Euros.

India

The Fintech Department of the Reserve Bank of India (RBI) has issued a concept note on digital Rupee – an Indian forthcoming CBDC.

It is stated in the Concept Note that the purpose of its issue is to create awareness about CBDCs in general and the planned features of the digital Rupee, in particular. The RBI also explains its approach towards introduction of the digital Rupee which is governed by two basic considerations – to create a digital Rupee that is as close as possible to a paper currency and to manage the process of introducing digital Rupee in a seamless manner.

The Concept Note also discusses key considerations such as technology and design choices, possible uses of digital rupee, issuance mechanisms etc. It examines the implications of introduction of CBDC on the banking system, monetary policy, financial stability, and analyses privacy issues.

According to the RBI, the digital Rupee is designed to make payments cheaper, more efficient, and secure. It will provide an additional option to the currently available forms of money and will not substantially differ from banknotes or money on your banking account. The RBI is going to carry out a pilot of the digital Rupee for specific use soon. It seems that there will be a wholesale version of the digital Rupee that will be used by legal entities and its retail version for personal use. The retail version of CBDC will be token-based, and the wholesale version will be account-based.

It is also stated in the Concept Note that the digital Rupee should be fully traceable, fully compliant to international AML/CFT standards with no scope for anonymous use.

According to the information provided, based on the pilot’s results a technical documentation for digital Rupee will be prepared and CBDC will appear in one of the forms in the financial system of India. You can read more about India’s approach to the cryptocurrency adoption in our earlier note.

USA

Following the lawsuit against DeFI project Digitex the US Commodity Futures Trading Commission (CFTC) stated the importance of regulating cryptocurrency companies. The CFTC believes that Decentralized Autonomous Organizations (DAOs) need to be held accountable too. The agency pays attention to the fact that most of DAOs offering services to users in the USA without any registration and failing to comply with Know Your Customer (KYC) policies and are not controlled in any way.

According to the CFTC it is important to think through the regulatory framework that would help decentralized organizations to register and obtain a license in the CFTC. Meanwhile the Commission recognizes that things are not so simple with the DAO, since it is very difficult to determine who should be held accountable in case of violation of the rules.

We continue to highlight the news of the world of crypto regulation worldwide. Please stay with us!