Eternity Law International News Legal regulation of operations with cryptocurrencies in the EU

Legal regulation of operations with cryptocurrencies in the EU

Published:
May 10, 2018

The unique structure of the supranational type, which includes the unification of 28 countries is the European Union. Legal regulation of operations with cryptocurrencies in the European Union is put on stream, since the cryptocurrency is actively used in the member countries of the Union.

Each state has sovereignty, national characteristics and a separate legal system. They have their own peculiarities of the regulation of traditional and cryptocurrency business.

Despite the fact that the bodies of the European Union did not accept the special rules regulating activities cryptocurrency, given the structure of the country considered to be sufficiently favorable for its introduction.

ACTION FOR SOLVING THE ISSUES OF REGULATION SCOPE OF CRYPTOCURRENCY

For the first time, they paid attention to this direction of activity in the European Union in 2012. The European Central Bank (ECB) has released data showing that it is not possible to deal with Bitcoin regulation, as in the usual financial area.

At this time, Bitcoin was defined as a convertible decentralized virtual currency.

Two years later, a representative of the ECB Mark Marsh noted that the electronic currency, regardless of the minimal impact on the economy, entails significant risks for users.

Marsh is emphasized the fact that it was not necessary to completely ignore its existence. In addition, most users cannot understand the nature of processes in the cryptographic market.

This is determined by the lack of legal regulation of the issue. This became the engine of the public hearing in 2016, where the main issue was the digital currency.

LEGAL REGULATION IN THE EUROPEAN UNION

Regulators in European countries do not use the term “crypto volume” as such. Here it is customary to call it a virtual currency, and in this region, it is considered as a payment instrument.

Evidence of this fact is the proposal of the European Commission, which stipulates the need to establish additional rules for regulating the activity of crypto-wallets and cryptocurrency exchange providers.

For this purpose, they want to adopt a special directive.

Despite the fact that the proposal was relevant, the approach criticized the ECB. In the opinion of the governing body, the definition of “virtual currency” is imperfect.

In addition, it was argued that the digital currency serves as a means of exchange, not payment. It was also noted that it is not money or currency as such.

However, it is worth noting that the proposed directive involves the introduction of compulsory licensing or registration of the functioning of the cryptographic exchanges, which carry out the exchange of the digital currency on fiat money and in the reverse order too.

This also applies to electronic wallet providers. In addition, the focus was on the need to create a central database, which would contain information about crypto-users.

In spite of all efforts, no special rules for regulation of cryptanalysis have yet been made. EU bodies are not moving in this direction because of uncoordinated issues.

TAXATION SYSTEM

Taking into account the fact that it is impossible to completely ignore the development of cryptographic goods, the European Court of Justice in 2015 adopted a corresponding decision.

According to him, Bitcoin should be considered not a commodity, but a means of payment. To begin with, in the tax field, it is accepted as a full-fledged currency. This led to the fact that the Bitcoin purchase / sale transactions, where the payment is fiat currency, is not subject to value added tax.

Prior to this event, the attitude of national regulators towards the taxation of operations with cryptocurrencies was different and unsystematic.

Taxes from the digital currency and operations with it, which are adopted in each individual state within the European Union, are regulated individually by the legislation. It depends on the origin of the crypto-exchange operations.

In order to taxes, each electronic currency is treated as an intangible asset or commodity. In this case, it is not a currency or payment means.

Each country includes separate rules for taxation in this area:

  • Norway, Germany, Finland – two taxes: on capital gains and wealth tax.
  • In Bulgaria, the digital currency acts as a financial instrument and is fully taxed in accordance with the law.
  • Austria considers cryptography as an asset of intangible origin, its mining is an operational activity.

Thus, at this stage of development, the European Union has not yet fully decided on the creation of a full-fledged legal regulation for the crypto-foreign exchange sphere. However, the first steps are already being taken.

At the level of individual states, there are progressive ideas, and even legitimate grounds for the regulation of the issue.

In order to carry out a procedure for regulating crypto-volume without risk, it is worth contacting Eternity Law International. Experienced experts are available here, just call and get help.

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