The European Council has approved a new directive that requires reporting on all transfers of crypto assets. This Eighth Directive on Administrative Cooperation (DAC8), proposed in December and approved last May, follows the Markets in Crypto-Assets (MiCA) and is part of a set of procedures for automatic information sharing between European governments for tax purposes. DAC8 is based on the Crypto-Asset Reporting Framework (CARF) and amendments created by the Organisation for Economic Cooperation and Development (OECD) and mandated by the G20.
This directive requires crypto asset service providers (CASPs) to collect identity and payment details of crypto asset transfers to help with traceability and identifying any suspicious transactions. DAC8 also implements stronger Anti-Money Laundering/Countering Terrorism Financing (AML/CFT) rules and proposes a new European-wide AML body with additional enforcement tools. CASPs have to collect the information in a secure manner and submit it concurrently or in advance of any transfer of crypto-assets.
Despite many assumptions that the crypto and blockchain industry remains a largely unregulated space, DAC8 along with MiCA are part of the effort to bring the sector under stricter regulatory control. DAC8 also requires extra reporting related to high-income individuals and stricter communication of Tax Identification Numbers, in line with the new Act.
The importance of this new act has been acknowledged by Swedish Finance Minister Elisabeth Svantesson in a statement: “We welcome the political agreement reached by EU Finance Ministers today on new tax transparency rules on the crypto-asset sector. The Directive will improve EU countries' ability to detect and counter tax fraud, tax evasion and tax avoidance.”
The introduction of DAC8 is significant as it sets up procedures for other European nations to follow in terms of reporting and exchange of information related to crypto assets, showing that the European Union is now recognizing the asset class to be serious, regulated and taxed. Further regulations and amendments related to crypto assets are yet to be expected.
Noah Davis
- 2023-05-18
EU Council Approves DAC8 For Crypto Asset Reporting
The European Council has approved DAC8 – a new Directive on Administrative Cooperation – for automating information sharing between EU governments for tax purposes. It requires crypto asset service providers to collect identity and payment details of crypto asset transfers to help with traceability and AML/CFT rules.
