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

source-logo  coingeek.com 14 May 2022 01:40, UTC

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

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

However, officials of the EU are kicking against the proposal. According to a paper, the protesting officials state that there are serious doubts about “the feasibility and proportionality” of maintaining such a blacklist.

The officials also warn that the prohibition may breach international trade rules. The provision could create unfair barriers to providing services in the EU if adopted, as the criteria for the list were unclear.

“Such a prohibition … might create barriers to the provision of services in the EU and therefore might be seen as constituting a breach of international commitments taken at the World Trade Organization,” an excerpt of the paper stated.

The officials note that a more viable alternative will be to remove the provision and debate it in a wider redraft of anti-money laundering laws the EU is also working on. However, the Commission has tagged the document as a “non-paper” to indicate that it does not represent a formal view of the institution.

The EU’s digital currency regulations controversies

Even as the MiCA regulation is in the final stages of its drawn-out and controversial negotiations, the protest is coming. Several provisions in the bill have been the cause of market tumult in the digital currency space.

One such provision was the proposed ban on proof of work (PoW) block reward mining, 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 of the European Parliament.

Another controversial EU legislation targeted at digital currencies is its draft rules to increase monitoring of digital assets transactions. The bill which passed last month requires VASPs to collect, store and report user information.

Per a Reuters report, key players in the market have been fighting the restrictive regulations. More than 40 digital currency company leaders signed a letter requesting that the EU withdraw the transaction reporting requirements.

Watch: CoinGeek New York panel, Media Influence: How News Reporting Affects the Digital Asset Market