• Wed. Jun 22nd, 2022

Proposed ban on digital currency firms operating in tax havens divides EU lawmakers

ByHazel R. Lang

May 14, 2022

The European Union (EU) continues to debate the provisions of its Crypto Asset Markets Bill (MiCA). A proposal to ban digital currency services from providers operating in countries the EU considers tax havens and money laundering havens has met with some opposition.

The provision proposed by the European Parliament will see the EU maintain a list of blacklisted digital currency companies from countries such as Panama and the US Cayman Islands.

However, EU officials oppose the proposal. According to one newspaper, protest leaders say there are serious doubts about the “feasibility and proportionality” of maintaining such a blacklist.

Officials also warned that the ban could breach international trade rules. The provision could create unfair barriers to the provision of services in the EU if passed, as the criteria in the list were unclear.

“Such a ban … could create obstacles to the provision of services in the EU and could therefore be considered as constituting a breach of international commitments made at the World Trade Organization,” reads an excerpt from the document.

Officials note that a more viable alternative will be to scrap the provision and discuss it as part of a broader overhaul of anti-money laundering laws that the EU is also working on. However, the Commission called the document a “non-document” to indicate that it does not represent a formal vision of the institution.

Controversies over EU digital currency regulation

Even as the MiCA settlement is in the final stages of its drawn-out and contentious negotiations, the protest is coming. Several provisions of the bill have been the cause of the market uproar in the area of ​​digital currency.

One such provision was the proposed ban on bulk reward mining from proof-of-work (PoW), which would have been a de facto ban on Bitcoin and other PoW blockchains. The provision was removed following strong opposition from the market and factions in the European Parliament.

Another controversial EU legislation targeting digital currencies is its draft rules to strengthen oversight of digital asset transactions. The bill passed last month requires VASPs to collect, store and report user information.

According to a Reuters report, major market players have battled restrictive regulations. More than 40 digital currency company executives have signed a letter asking the EU to withdraw transaction reporting requirements.

Watch: CoinGeek New York Panel, Media Influence: How News Reporting Affects The Digital Asset Market

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