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European Union rolls up its sleeves to regulate cryptocurrencies and crack down on fraud

Its taxation still lacks clear regulations and exchange platforms must register with the Bank of Spain

The European Union wants a single, harmonized regulation to govern the cryptocurrency universe. A week ago, the European Parliament took a definitive step in this direction by giving the green light to the MiCA (Markets in Crypto Assets) Regulation proposal, where the proposed amendment prohibits or restricts the circulation of bitcoins.

Experts agree on the importance of this regulation coming as soon as possible. This idea was raised at the Crypto Risk in Money Laundering discussion table at the VII Meeting They Meet. As Miguel Soler Ruiz-Boada, director of Prosegur, points out, by 2021 a total of $8.6 billion in cryptocurrency value ended up in the hands of hackers.

The lack of a common law on virtual currencies is a brake to “the arrival of institutional investors and large fortunes in the sector.” This is the opinion of Lorena Martínez Romero, director of the risk and regulatory compliance department of the cryptocurrency selling and buying platform 2gether.

For him, a regulation that ensures a common regulatory framework across territories would dispel the doubts of investors who are still wary of the cryptocurrency world. Such a standard, however, may take a few years to arrive.

Until then, digital assets pose numerous legal challenges. “Legal certainty and uniformity are needed, at least within the European Union. The main reluctance is the high volatility, the lack of government support and, in my experience, how little regulation there is,” says the compliance officer.

tax authorities
Cryptocurrencies also represent gray spaces for the Spanish treasury. Said Rafael Abad Prieto, a lawyer at the Bank of Spain and member of the Executive Service of the Commission for the Prevention of Money Laundering and Monetary Offenses (SEPBLAC) at the meeting organized by Cumplen. Although the current law regulates the prevention of money laundering, there are still tax aspects that remain up in the air and should be more precisely defined. For example, model 720 is intended for the declaration of foreign accounts. “If I have more than 50,000 euros in cryptocurrencies abroad, do I have to file the 720 model? In principle, it is not in the regulations,” says the legal expert. This week, the Treasury clarified that, at least this year, there will be no need to report on these values located abroad. However, the question remains up in the air for future years.

The possibility of being attacked by a hacker is another point that generates concern. In this regard, Abad recalls how in 2013 the Mt. Gox platform was the victim of a heist that led to the loss of $460 million in bitcoins and drove the provider, then a market leader, into bankruptcy.

In control
To combat cybercrime, the control agencies of each country closely watch the activity of what are known as Virtual Asset Service Providers (VASP), the companies that allow the sale and purchase of virtual currencies and their custody. Since 2021, these cryptocurrency service providers must register on an official list of the Bank of Spain and pass through a strong filter of measures to prevent capital flight and terrorist financing. Failure to do so can result in millions in fines.

In this sense, Lorena Martínez explains that to ensure that legality is upheld within cryptocurrency platforms, the figure of the compliance officer has acquired vital importance. But she laments that “startups don’t always have the resources necessary to have good compliance.” In addition, he adds, not all countries have adopted European anti-money laundering laws “with the same level of demand,” which traces a dispersed and unclear regulatory map.



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