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- Held in Strasbourg, France, DAC8 received overwhelming support from 535 members with just 57 against the bill.
- The EU member states have until December 31, 2025, to implement the new crypto tax rules as it goes into effect on January 01, 2026.
The European Union has moved a step closer to taming the cryptocurrency market that has, ostensibly, posed significant risks to the financial stability of the respective member states. On Wednesday, the European Union members voted overwhelmingly in support of the eighth iteration of the Directive on Administrative Cooperation (DAC8), a cryptocurrency tax reporting rule. Notably, 535 EU members voted for the DAC8 compared to just 57 members who were against the bill and 60 abstentions.
Following the overwhelming majority support for the DAC8, the European Union is preparing to adopt modern means of updating its financial market without destabilizing the respective currencies. Moreover, the DAC8 is expected to complete the existing anti-money laundering laws and also the recently adopted Markets in Crypto-Assets (MiCA) legislation.
Heads up: The European Parliament plenary adoption of the #DAC8 is happening today📣
As a reminder: DAC8 is an instrumental legislation designed to further harmonise the crypto-assets market, complementing #MiCA and #AML regulations.
What are your thoughts on the DAC8 adoption? pic.twitter.com/YRFZSBJYwp
— European Crypto Initiative (@EuCInitiative) September 13, 2023
European Market Adopts Crypto Through Regulations
The fast growth of the cryptocurrency market through mainstream adoption has undeniably shaken most traditional dynasties in different countries. The European Union regulators have swiftly adopted several measures to ensure crypto firms remain under the fiat currencies and not the other way around. Nonetheless, crypto experts believe the governments had to step in in a bid to ensure safe adoption, more so following several rug pulls, scams, and reports of terrorism-enabled activities through the crypto market.
According to a recent report, Europe has about 31 million people invested directly in the crypto market. With the European countries boasting more than 750 million people, experts believe more investors will enter the crypto industry in the next few years. Moreover, the continent is grappling with high inflation among other financial instabilities that the crypto market promises to solve.
What Next for the Crypto Market in Europe
Onwards, crypto firms are expected to report transactions conducted by clients from the European member states for tax accounting purposes and also ensure AML compliance. Large corporations entering the crypto market through regulated channels like ETFs will be expected to charge respective taxation to their clients.
“On 8 December 2022, the European Commission proposed to set up a reporting framework which would require crypto-asset service providers to report transactions made by EU clients. This would help tax authorities to track the trade of crypto-assets and the proceeds gained, thereby reducing the risk of tax fraud and evasion,” the EU noted.
Crypto holders through non-custodial wallets like Ledger could, however, escape the crypto regulatory scrutiny in the European market, which has been touted as exploitative on investors. Nevertheless, crypto investors will get trapped every time they use centralized exchanges and DEXes that are compliant with the EU. Furthermore, most crypto firms are obtaining operational licenses in order to ensure future growth prospects in different jurisdictions around the world.
