Compliant Wednesday
Hey everyone,
Welcome to a new issue of Compliant Wednesday — your five-minute zero-knowledge rollup of crypto policy and regulation news. We batch the most relevant information, so you can stay compliant and decentralized.
In this week’s issue:
- EU approves “kill switch” for smart contracts
- ECB chair thinks crypto banks should be regulated like traditional banks
- Spaniards must declare crypto holdings over 50,000
- US regulatory clarity not before elections, says Paradigm
The EU has approved the Data Act, which requires smart contracts to have a “kill switch.” Although enforcement is still unclear, this has raised concerns about the impact on blockchain decentralization and innovation. Some believe it could hinder adoption of smart contracts, while others see potential for increased standardization. The regulation is facing backlash, but could improve safety and regulations for the industry.
Our take:
We commend the EU for taking the regulatory lead with MiCA. But “kill switches” are not the way to go. The jury is still out there on implementation, but regulation must not sacrifice permissionlessness, a key value proposition of decentralized finance.
Read more here.
Andrea Enria, chair of the supervisory board at the ECB, stated in an interview that crypto firms operating like banks should be regulated as such, even with the challenges of deterritorialization and consolidation. He also said the ECB does not see their planned digital euro or private crypto as a threat to traditional banks. Regarding DeFi, Enria opined that the absence of a clear entity is challenging for regulators.
Our take:
This echoes a key theme of ours: regulation is coming, like it or not. And like it or not, DeFi will not be able to hide behind the absence of clear entities forever. Best to prepare before the regulation hammer hits…
Read more here.
Spanish citizens must declare any crypto assets they hold on non-Spanish platforms by March 31, 2024 if their balance exceeds 50,000 euros. Spain’s tax agency Agencia Tributaria has issued a form for this declaration and taxpayers must report their holdings by Dec. 31, 2023. The country is increasing efforts to charge taxes on crypto assets and has implemented regulations to govern their use. This coincides with Spain’s proactive regulatory approach, which will see the EU’s crypto framework MiCA come into force nationally in December 2025.
Our take:
Spain’s approach to regulation is not wrong, just early. Blockchain proponents won’t like to hear it, but mass adoption of technology cannot and will not happen without mass adoption of tax compliance and enforcement.
Read more here.
A recent YouTube interview with Justin Slaughter, Policy Director at VC fund Paradigm, discussed bipartisan bills in Congress that seek to establish clearer rules for cryptocurrencies. The Financial Innovation Technology for the 21st Century (FIT 21) bill and Payment Stablecoins Bill aim to provide regulatory frameworks and clarity around how digital assets fit within existing laws. However, Slaughter does not expect major crypto legislation before the 2024 elections. US regulators fear other countries could set global standards without clear US rules, but the US regulatory landscape remains a work in progress.
Our take:
The US is the big laggard when it comes to regulation. But make no mistake, it will eventually be on the agenda…
Watch the interview here.
And that’s a wrap! Does more regulation make you bullish or bearish in the long run? Let us know in the comments!
