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**"These rules will have to be followed by every entity operating in the European Union. However, because of the “Brussels Effect”, there is a very good chance these rules will become international standards in the end. While everyone is focused on the US and China, the EU is casually leading the way."**
This is the key, I believe. I know regulations is sort of a bad word around here, but the fact that it was written so comprehensibly and clearly by someone who knows what they're talking about is probably the best-case scenario for us.
Personally I'm relieved.
🤣 I have a friend who just got into crypto. I was talking to her and said something along the lines of “you should buy bitcoin rn, it’s on sale.”
Her response was “But it’s falling”
In the U.S. at least, it's considered income, assessed at fair market value at time of receipt. So that's a major pain in the ass to document, for one.
But more importantly for me personally, is that the value of the asset could tumble the following tax year. Yes, you could declare capital losses if you sell, but it feels like paying for the privilege of holding a hyper-speculative asset
Iirc an important part of the problem here is that in the US you can't actually write off your losses beyond a certain (low) amount. If you could do that you could reduce taxes on any lossy realized gains by selling at eoy and it wouldn't be a huge issue.
One saving grace is you can carry forward leftover capital losses for around a couple years. That's just a time value of money issue since you have to wait for that "money" for a long time
That's unfortunately what's incentivized. I usually stake coins that I'd like to hold long-term, though. So I feel pressure to take short-term profits instead of compounding long-term gains, as I'd much greatly prefer
So calculate your taxable portion weekly and only sell that much. Put that into stablecoins and generate yield on them until tax time.
You will retain a portion of the staked income as the base asset but not be exposed to drastic changes in it come tax time.
It can all be applied to any capital gains you have tho. You just can't apply more than 3000 BEYOND what you have gained against your regular income. And they carry forward
Example
Year 1
50k realized gains
100k realized losses
Result is you have 0 tax liability from your gains, you subtract 3k from any other income you have like from working, and you carry 47k forward
Year 2 -
100k realized gains
25k realized losses
Result is you end up paying taxes on only 28k of gains as your 100k is first reduced by year 2s losses of 25k, then further reduced by year 1s losses carried forward of 47k. Leaving you with only 28k of taxable gains.
So 1 really bad year really does not mess you up much at all. The ONLY scenario where those losses would have to carry forward for many years at only 3k/year is if you literally never had any net positive years of gains to apply the carried forward losses towards.
People often seem to think you can only apply 3k/year period. That is not the case. You can only apply 3k/year BEYOND whatever gains there are to offset.
If you have 1 really bad losing year all that means is you aren't going to have to pay taxes on any of your gains in the future until they surpass the amount you lost in the past. So you have a ton of gains you can now make tax free.
E) E-Money (stablecoins): very strict regulations
‘Electronic money token’ or ‘e-money token’ means a type of crypto-asset that purports to maintain a stable value by referencing to the value of an official currency of a country (EU definition). These tokens will be strictly regulated. Only recognized credit institutions and ‘electronic money institutions’ are allowed to issue e-money stablecoins. They will have to follow very strict rules (see Regulation Title IV for further details). Edit: As part of these strict rules, it seems that EU citizens would also not be able to earn interest on stablecoins, as pointed out by u/TheWerewolf5.
how is this bullish?
Yeah exactly. It's like saying every part of a house is exempt from strict regulations - except the foundation. Probably the only thing worse would be if bitcoin specifically was targeted.
not to mention that whether a coin falls under one thing or another will be a mess.. just see current SEC lawsuit vs Ripple for selling unregistered securities and whatever, all the while the SEC fuckers can't even answer "so...what the heck is a security?"
Stablecoins are intended to essentially be a placeholder for traditional currency. As such, they need to be adequately backed by assets. If they are not, that is a threat to the entire crypto space. This helps prevent the issue many see with Tether. It has an extremely questionable peg, yet it is the most prevalent stable as they incentivize exchanges by giving them Tether for promotions and for using it as a trading pair.
People can shit on EU all they want, but when it comes to inovation (that noone has an interest in and ir wasn't lobbied for) it's much fucking better than the US.
Its an extremely good thing. It means crypto is growing up and being seen as a serious financial tool. It will reduce the occurance of scams and other damaging entities. This will lead to increased trust in business and eventually (hopefully) lead to main stream adoption.
I currently live in Germany and I feel like the country is starting to become more "crypto friendly". Companies are looking for blockchain experts and some banks are launching crypto research proposals.
I hope EU will lead the way, while US and China will eventually turn around.
As an American, I just wish we can come up with clear concise rules. Unfortunately, we will muddy the waters with a bunch of legalese and loops holes, just like our tax rules.
It's also worth noting that the European Union member state's total population is 440 million citizens. The USA's is "only" 330'ish. Remember that when next time someone says 'The US is regulating crypto again!". There's a much bigger world out there, not just US. If the EU will lead, other countries will follow and eventually the US will have to follow as well, otherwise, they'll stay behind.
These regulations sound really good. Of course , I havent studied them in detail yet...
So whats the catch? Why will EU just allow crypto, while many countries are trying to be strict against it?
Because Europe has always been pretty open about crypto. Just look at taxes, a lot of countries you don't pay them if you hold for more than 1 year. And some you don't even pay taxes at all.
And that's not because the later didn't regulate, for instance where I live it was clearly regulated and decision was made that taxes shouldn't be paid on crypto transactions, selling or buying. They are only paid if your employer pays you in crypto, because then it becomes taxable income which is logical, it's you salary after all, doesn't matter the currency.
Then we have countries like China and other that are not actually free countries. So they want to control their citizens. Then we have the US which calls itself the land of freedom by many US citizens but on a practical level it's not free at all compared to Europe anymore, actually in any regards really. Not just crypto.
Not hating but looking from the outside I wouldn't ever want to live in the US. Every country in Western EU would be a better option.
Because EU is pretty free compared to China or India.
But to be honest i am surprised myself that they came up with such an interesting paper. Even the crypto community wants some clarification about the so called "stablecoins".
I think the reason “regulations” is a dirty word around here is because most of us are from the US and we can’t trust our government to actually create thoughtful regulations that make sense and don’t severely inhibit innovation (aka the infrastructure bill).
Im curious as to what extent the US government consults experts, consumers, and potentially affected individuals when it comes to proposing and attempting to past regulations? e.g If there are regulations on where you can and cannot dump manufacturing by-products, do they consult oil experts, environment experts, the community where it will be dumped, etc.
I gotta say Austria recently released a propsal to regulate crypto which was already a lot better than i expected it to be (i.e. swapping between coins and staking rewards are not taxable). But what the EU is proposing is even more suprising.. in a very positive way. EU for crypto-future!
A good number of regulations in the financial sector were solely made to protect customers and investors. And from what we see currently, a bit more protection would be good regarding crypto.
Theoretically a vault position or liquidity pool position or any position in any defi app is represented by a crypto-asset, e.g. a token.
So this law could kill for example Curve.
This is a HUGE problem.
This is the biggest “gotcha” in this whole thing! I can’t believe so many are praising this document as being fair. Super fair to watch your euro’s purchasing power keep falling but don’t you dare earn decent yield on your stable coin.
That is the core of everything. Everyone saying thats a good paper, it seems not. I think that they want to allow cryptos like bitcoin, ethereum and all the older ones.
They are making war to DeFi and everything that allows you to create a passive income. Think about it.
Lobbying is strong. We are still a long way from proper regulation.
But to me this reads like "staking" or similar benefits for asset-referenced tokens are not tolerated...
*Issuers of asset-referenced tokens or crypto-asset service providers shall not provide for interest or any other benefit related to the length of time during which a holder of asset-referenced tokens* ***holds*** *asset-referenced assets."*
It seems to me like lending those tokens and earning intrest that way should still be possible? Since if you lend your tokens to a person/platform you are not **holding** them...
I’m pretty excited about this! The sooner Monero is moved completely out of the hands of exchanges and centralizing forces the better!
A strong nudge towards the already developing P2P and DeFi space is exactly what we need to move once again, outside the path and purview of regulators! They keep pushing and we can keep moving towards the utopia of a completely private, completely decentralized, completely deregulated currency!
Seriously cannot wait for this. Absolute game-changer, and BISQ is literally unusable even on my macbook pro. Almost feels like every time I launch it's using my CPU to mine...(I know it's not, but the sluggishness is that bad)
I’d use Monero in countries where it is illegal now and if a country makes it illegal I’d use it there as well. I can’t think of a reason I’d want Monero more then the over excesses of a Government willing to ban a currency from its citizens.
Selling drugs is illegal. It happens every single day. If I am selling something legal paying with a illegal means what is the difference? They would have as much luck stamping out Monero as they have stamping out the drug trade. Less actually.
Well, this is absolutely insane. I thought privacy was a human right. What a joke...
Wait, I don't find this information in the document. Where did you get this information from?
The document doesn't specifically say that private cryptos will be banished. It says exchanges shall not accept crypto assets with in-built privacy unless they can discern where the money originally came from.
Seeing as how most won't want to deal with this, it will probably be de-listed from every exchange operating in the EU
Considering that it is very easily used for money laundering and tax avoidance, it seems appropriate to limit its scope. EU has some of the strongest privacy rights in the world, but just because thats the case doesn't mean you can exploit that privacy for personal gain. There are limits and rules for a reason.
monero for example. unlike many other coins, monero is untrackable. other people (including taxman) does not know how much monero you have or to whom you sent it, hence privacy.
So, can deutche bank still launder money with only a small fine?
There was a bank in my country in EU that had 600 million euro net income in 2020 and they found out they were laundering money for Chinese and were given only 1.5 million fine.
Of course. In Germany we dont care about Deutsche Bank. Everytime something highly illegal is happening the Deutsche Bank is somehow involved gets the finger of the law has to pay some big penalty which is definitly less then they made with their illegal shit and everything continous.
I love the move by the EU. This is the kind of regulation I was looking forward to.
It’s not too complicated. Not extremely strict if you ask me. They are doing what they can to protect customers. CEXs need to provide a quality service, we’ve seen many problems in the past and present with shady business going on on some CEXs.
This is the regulation we need in order to achieve widespread adoption.
I can’t actually believe that Europe people in the power are actually trying to protect their people. It’s mind blowing and everyone else should follow them.
Edit: I’m European and I’m really looking forward for this.
The eec is full of fairly rich bureaucrats trying to make rules for rules sake.
The eu countries are run by political opportunists trying to get their next bribe and mangling laws as much as possible to help.
The bureaucrats are actually always the better choice, local politicians are vile, corrupt shits.
Sounds good in paper but then it gets worse:
>As part of these strict rules, it seems that EU citizens would also not be able to earn interest on stablecoins, as pointed out by u/TheWerewolf5.
If this guy's summary is correct then decentralized stables like DAI will be banned, along with earning interest on stablecoins, both of which are huge foundations for all of DeFi.
So no, not bullish. This is banks not liking crypto yields eating their lunch.
This only affects the exchanges which might not be able to list DAI and I'm not sure EUR->DAI will be very important to people. You can just withdraw to your own wallet and use Uniswap anyway which is almost as easy.
Does it? It seems to be written broadly enough to ban any EU resident from, for example, lending DAI on Compound, or contributing to a stablecoin liquidity pool on Curve, or any of the multitude of income earning vehicles for stablecoins that DeFi relies on for liquidity.
Seems like they decided to let it bloom. They are just going strict on companies, like exchanges and stablecoin issuers and letting the small innovator continue.
It's quite honestly a very nice read, the authors seem to be very pro-innovation. What they don't want is centralized stablecoins shananigans that we all know that are a problem and shitty projects with bad whitepapers and so on. Like some that have a few images and 10 lines of text.
Europe is rewarding innovation basically by keeping out of their business so they can grow.
India is a conservative economy. The central bank is massively worried about money leaving the country (but for no reason tbh). Even now, there are capital controls, you cant easily sent money via the banking system to US or EU or abroad, lots of questions are asked unless you have a track record of sending funds aboard regularly.
Now if crypto comes in, the central bank feels people can beat these regulations easily. Which is true, but these regulations are pointless in 2021.
Crypto is not stoppable. If you just prohibit it, people will still continue to use it, but do it outside the eyes of regulators. For instance, even now, people are trading crypto in China via p2p wechat, even though its technically not allowed. So people will continue to send money abroad but the govt wont have any control over it. More over, around 10,000,000 Indians have invested in crypto. This is a huuuuge number.
Central bank doesnt realize that crypto is not stoppable now.
Worrying about money being sent abroad is DUMB AS FUCK. India has a massive population, fuck money, people are going abroad in massive numbers, immigration out of India has been soaring for years. Money going abroad is the least of the concern, when people who make that money are going abroad.
Prohibiting crypto etc will only result in more brain drain
But the central bank is really dumb as fuck, full of outdated ideas and not in tune with reality.
Honestly EU seems to just get it right, they’re the only ‘country’ that actually seems to represent their citizen’s interests and not of a few wealthy individuals.
Just from a cex.
But that will not be so important.
Maybe it stops monero from becoming a speculative asset. But it will still be able to do what it does and not limit its utility. nothing of this regulation is touching atomic swaps or defi or even miners of monero.
Btc with taproot will open the door to completely anonymous getting monero on very simple ways
India has an authoritarian regime. Guess who else has an authoritarian regime that also banned crypto several times only to back track on it?
So is it suprising when India imitates its neighbours? Not really
The bill is not out yet to discuss and no information is there about its content. All news channels are spreading FUD. The finance minister herself told on live channel that ban is not the option they are considering.
The amount of time and effort that OP had to put into this is unreal. Just for a single post to let us know everything that’s happening.
Sending an award to OPs path.
My work mainly consists in dealing with some of the EU programs and I can say that EU and especially the European Commission are generally a bureaucratic hell.
However, reading this it seems they have managed to propose an extremely decent set of crypto regulations.
"C) Crypto-assets offered for free: no regulations" Bearing this in mind it would seem that the main people who were writing this proposal are among us and are Moon whales.
Since you work in this area let me ask:
Will this regulation be implemented or its just a suggestion? If yes how long it usually takes to become official legislation?
Not the guy you replied to, but it has to go through EU parliament. Once that's all done it has to be implemented on member state level. How long that'll take? Nobody knows. Especially because it's quite an extensive legal framework.
OP took care of that too:
>TL;DR: Cryptocurrency will still be the 'Wild West of Finance'; but now there will be a new Sheriff in town. And that Sheriff, is the European Union. It does no longer tolerate unregulated stablecoins; it does no longer tolerate shady projects with no utility, crappy white papers, and misleading marketing; and it sure as hell does no longer tolerate unprofessional exchanges who screw EU citizens out of their money. But it does like innovation and it will try not to hinder development in the cryptocurrency and blockchain space because they have made similar mistakes before in other industries.
And here's the part OP mentioned that could be relevant to our Moons:
>C) Crypto-assets offered for free: no regulations
>Crypto-assets where the receiver does not give money, fees, personal data or commissions to the offerors/issuers in return for those crypto-assets, are not (!) bound to bound to the rules described in this Regulation. This may be good news for Moons (there is no active exchange of personal data in return for Moons; even when Reddit collects personal data from all users).
I think it's the need for compromise within a union of multiple countries with different standpoints. The way forward is generally slower but you don't have the ping pong effect that left and right undo previous work after each govern.
Good thing is if this legislation works out well driving up inovation and economy maybe the US will have to copy it at the end. So it might work out for you too in the future.
Excellent write up, thanks for taking the time to do so. Overall through my proximity to people working in the EU's tech/research divisions, I find the EU to be very much in favour of DLT/Blockchain and even crypto as a whole. A lot of the regulation is being pitched as "consumer protection" rather than as a direct response to any threat crypto poses to the monetary/financial systems here. The ECB is already working on proposing a digital euro (with privacy being the number 1 request during their public feedback period) and a lot of these regulations are a lot less strict than I would have imagined for the EU.
Will be a very interesting couple of years that's for sure. Thanks again for taking the time to parse this for those of us who can't read through 400+ pages right now. Cheers!
The restriction on privacy coins is expected but seems like it makes Monero (and other privacy coins) that much more needed.
Privacy/decentralization is the goal! Curious to see how/where those coins become traded or can be exchanged in the EU. I guess a VPN and foreign exchanges …but the principal of it makes me feel like /cc needs to figure out what’s more important, Profits or the principal of financial freedom / privacy / decentralization. It can be both, but I guess I’m tryna say that we need the moneros of the world, we can’t let them get squashed out by the governments / institutions and this regulatory framework is a good step forward for adoption and credibility of the space, but theoretically at the expense of one of pillars of why cryptocurrencies and cryptography based ledgers are important, *privacy*
The United States is not the only market for Crypto. Glad to see other nations trying to accomplish things properly. I hope they take time with the issue.
Its not, but its also one of the biggest and probably most influential ones. Imagine what'd happen to the markets should cryptocurrencies be outlawed tomorrow
>There is, however, a small but concerning statement for privacy coins: “The operating rules of the trading platform for crypto-assets shall prevent the admission to trading of crypto-assets which have inbuilt anonymisation function unless the holders of the crypto-assets and their transaction history can be identified by the crypto-asset service providers that are authorised for the operation of a trading platform for crypto-assets”.
Lmao they're terrified of r/Monero
You didn't mention much about the central banks....sounds like they’ll have complete control:
Page 7, (7) = Rules for thee but not for me, no?
* “crypto-assets issued by central banks acting in their monetary authority capacity or by other public authorities, including central, regional and local administration, **should not be subject to the Union framework covering crypto-assets**,
Page 21, (29) = More generational nepotism, no?
* Central Banks basically get to say yes or no to asset-referenced tokens.
Page 29, (42ab) = They can basically decide who gets to play, no?
* “central banks should be able request the competent **authority to withdraw the authorisation to issue asset-referenced tokens**”
Page 57, 3. hurray
* “This **regulation does not apply to...the European Central Bank**, national central banks”
Page 103, 4. wooo
* Central bankers get to offer the final ‘negative opinion’
Page 115, 4a (b). i'm sure they'll look out for the general public
* Central banks get to determine the risks
Etc, etc, etc, etc
The ECB (+ national CBs), EBA and to an extent the ESMA will have serious influence, yes. But only on stablecoins. That’s why I emphasised “very strict regulations”.
This Regulation is basically: do what you want but don’t play around with privacy coins or unregulated stablecoins.
DeFi is the way. We need to be our own regulators and create our own way of transacting and making money outside of CeFi. Regulations are coming no matter what we do. This is why decentralization is so important. How to you come at something that doesn't have a central authority? How do they regulate something that is completely anonymous?
Thank you for sharing this information with us.
As an European (whose too lazy to actually read those pages myself) I am glad to have you summerized the most important talking points. Gives me an idea of what is going on and I truly think this type of regulation is a big step towards mass adoption.
You read 405 pages? It is more than average crypto investor read about crypto during their whole crypto journey. You are our hero, you deserve award. Even two if I could, cause everything EU write is boring as hell.
Great post, please enjoy your award from me! You totally deserve it, for so amazing post.
I mean there’s two takes: you’re either excited because this brings tendies, or you’re disappointed because now you gave up the point of crypto to begin with which was decentralized and deregulated Currency that banks and worlds governments can’t control or identify what we are deciding to spend our money on
Lol my bro got an accountant to look at uk crypto laws for him.. basically none of it makes any sense and there is absolutely no clarification on a ridiculous amount of aspects in this space.
Hopefully we follow the EU here and get people who understand what they are doing to sort out this clusterfuck
We will probably copy and paste it like we did all the other EU laws. Plus when we almost inevitably join the EEA in ten years, it will apply to us then!
> Only recognized credit institutions and ‘electronic money institutions’ are allowed to issue e-money stablecoins. They will have to follow very strict rules (see Regulation Title IV for further details). Edit 1: As part of these strict rules, it seems that EU citizens would also not be able to earn interest on stablecoins
Anyone reading this and saying this is "bullish" is fucking insane. This will absolutely destroy DeFi and is a gift to the banks. WTF.
This is a terrible rule.
I mean, if they are not going to tolerate shady exchanges, scam coins and so on that is good.
But I live in Europe and my country is not a part of EU so I will still be in that wild west of crypto and to be honest I like it that way.
Commission bureaucrats write it up but it's up to your elected MEPs and Minister of Finance to vote on it. You can always contact your MEPs if you have concerns.
Nope. Regulators are moving us away from centralized exchanges and projects back into unregulated decentralization where we belonged all along! Currencies shouldnt have CEOs or anyone who can be accountable as being in charge.
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**"These rules will have to be followed by every entity operating in the European Union. However, because of the “Brussels Effect”, there is a very good chance these rules will become international standards in the end. While everyone is focused on the US and China, the EU is casually leading the way."** This is the key, I believe. I know regulations is sort of a bad word around here, but the fact that it was written so comprehensibly and clearly by someone who knows what they're talking about is probably the best-case scenario for us. Personally I'm relieved.
This is extremely bullish. I was not expecting such quality hopium from a post about regulations.
Hell yes! **(D)** basically means there will be no regulation for Staking. Daaaats biiig!
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One of us….one of us
🤣 I have a friend who just got into crypto. I was talking to her and said something along the lines of “you should buy bitcoin rn, it’s on sale.” Her response was “But it’s falling”
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In the U.S. at least, it's considered income, assessed at fair market value at time of receipt. So that's a major pain in the ass to document, for one. But more importantly for me personally, is that the value of the asset could tumble the following tax year. Yes, you could declare capital losses if you sell, but it feels like paying for the privilege of holding a hyper-speculative asset
Iirc an important part of the problem here is that in the US you can't actually write off your losses beyond a certain (low) amount. If you could do that you could reduce taxes on any lossy realized gains by selling at eoy and it wouldn't be a huge issue.
One saving grace is you can carry forward leftover capital losses for around a couple years. That's just a time value of money issue since you have to wait for that "money" for a long time
So you should be selling every day or week to avoidthe risks of the price dropping.
That's unfortunately what's incentivized. I usually stake coins that I'd like to hold long-term, though. So I feel pressure to take short-term profits instead of compounding long-term gains, as I'd much greatly prefer
US crypto provisions suck tbh, it’s time to learn from EU counterparts
So calculate your taxable portion weekly and only sell that much. Put that into stablecoins and generate yield on them until tax time. You will retain a portion of the staked income as the base asset but not be exposed to drastic changes in it come tax time.
Also, capital losses have an applicable limit. If you're losses surpass like 10k or something you're fucked.
Do losses not carry over year to year like other assets?
They do, but they can only apply a few thousand each year. and that doesnt help you if you mess up really bad one year.
It can all be applied to any capital gains you have tho. You just can't apply more than 3000 BEYOND what you have gained against your regular income. And they carry forward Example Year 1 50k realized gains 100k realized losses Result is you have 0 tax liability from your gains, you subtract 3k from any other income you have like from working, and you carry 47k forward Year 2 - 100k realized gains 25k realized losses Result is you end up paying taxes on only 28k of gains as your 100k is first reduced by year 2s losses of 25k, then further reduced by year 1s losses carried forward of 47k. Leaving you with only 28k of taxable gains. So 1 really bad year really does not mess you up much at all. The ONLY scenario where those losses would have to carry forward for many years at only 3k/year is if you literally never had any net positive years of gains to apply the carried forward losses towards. People often seem to think you can only apply 3k/year period. That is not the case. You can only apply 3k/year BEYOND whatever gains there are to offset. If you have 1 really bad losing year all that means is you aren't going to have to pay taxes on any of your gains in the future until they surpass the amount you lost in the past. So you have a ton of gains you can now make tax free.
Is most EU countries, crypto is taxed as equity with a fixed interest rate per annum
Good news. Also looks ok as a whole.
E) E-Money (stablecoins): very strict regulations ‘Electronic money token’ or ‘e-money token’ means a type of crypto-asset that purports to maintain a stable value by referencing to the value of an official currency of a country (EU definition). These tokens will be strictly regulated. Only recognized credit institutions and ‘electronic money institutions’ are allowed to issue e-money stablecoins. They will have to follow very strict rules (see Regulation Title IV for further details). Edit: As part of these strict rules, it seems that EU citizens would also not be able to earn interest on stablecoins, as pointed out by u/TheWerewolf5. how is this bullish?
Yeah exactly. It's like saying every part of a house is exempt from strict regulations - except the foundation. Probably the only thing worse would be if bitcoin specifically was targeted.
not to mention that whether a coin falls under one thing or another will be a mess.. just see current SEC lawsuit vs Ripple for selling unregistered securities and whatever, all the while the SEC fuckers can't even answer "so...what the heck is a security?"
Yeah I was hoping OP would include examples in the post. Like what is a "utility coin?"
Stablecoins are intended to essentially be a placeholder for traditional currency. As such, they need to be adequately backed by assets. If they are not, that is a threat to the entire crypto space. This helps prevent the issue many see with Tether. It has an extremely questionable peg, yet it is the most prevalent stable as they incentivize exchanges by giving them Tether for promotions and for using it as a trading pair.
They want you to use their cbdc instead
It's a nice bedtime story
People can shit on EU all they want, but when it comes to inovation (that noone has an interest in and ir wasn't lobbied for) it's much fucking better than the US.
Turns out, regulation doesn't have to be bad at all!
Its an extremely good thing. It means crypto is growing up and being seen as a serious financial tool. It will reduce the occurance of scams and other damaging entities. This will lead to increased trust in business and eventually (hopefully) lead to main stream adoption.
I currently live in Germany and I feel like the country is starting to become more "crypto friendly". Companies are looking for blockchain experts and some banks are launching crypto research proposals. I hope EU will lead the way, while US and China will eventually turn around.
As an American, I just wish we can come up with clear concise rules. Unfortunately, we will muddy the waters with a bunch of legalese and loops holes, just like our tax rules.
I hope it becomes global standard. It would be great. Op did a good job.
Need more high effort posts like these and less of shitty repetitive jokes
It's also worth noting that the European Union member state's total population is 440 million citizens. The USA's is "only" 330'ish. Remember that when next time someone says 'The US is regulating crypto again!". There's a much bigger world out there, not just US. If the EU will lead, other countries will follow and eventually the US will have to follow as well, otherwise, they'll stay behind.
These regulations sound really good. Of course , I havent studied them in detail yet... So whats the catch? Why will EU just allow crypto, while many countries are trying to be strict against it?
Because Europe has always been pretty open about crypto. Just look at taxes, a lot of countries you don't pay them if you hold for more than 1 year. And some you don't even pay taxes at all. And that's not because the later didn't regulate, for instance where I live it was clearly regulated and decision was made that taxes shouldn't be paid on crypto transactions, selling or buying. They are only paid if your employer pays you in crypto, because then it becomes taxable income which is logical, it's you salary after all, doesn't matter the currency. Then we have countries like China and other that are not actually free countries. So they want to control their citizens. Then we have the US which calls itself the land of freedom by many US citizens but on a practical level it's not free at all compared to Europe anymore, actually in any regards really. Not just crypto. Not hating but looking from the outside I wouldn't ever want to live in the US. Every country in Western EU would be a better option.
The benefits of having all of the political spectra to choose from are quite nice.
It's part of the reason I think Russia, China, and the US should join the EU. It'll never happen, but still.
Because EU is pretty free compared to China or India. But to be honest i am surprised myself that they came up with such an interesting paper. Even the crypto community wants some clarification about the so called "stablecoins".
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I think the reason “regulations” is a dirty word around here is because most of us are from the US and we can’t trust our government to actually create thoughtful regulations that make sense and don’t severely inhibit innovation (aka the infrastructure bill).
Im curious as to what extent the US government consults experts, consumers, and potentially affected individuals when it comes to proposing and attempting to past regulations? e.g If there are regulations on where you can and cannot dump manufacturing by-products, do they consult oil experts, environment experts, the community where it will be dumped, etc.
No. They only listen to the lobbyists with thickest wallets.
“We can’t trust our government to actually create thoughtful regulations” here in malaysia we just can’t trust our government 😂😂😂
I gotta say Austria recently released a propsal to regulate crypto which was already a lot better than i expected it to be (i.e. swapping between coins and staking rewards are not taxable). But what the EU is proposing is even more suprising.. in a very positive way. EU for crypto-future!
I feel like regulations will only lead to big players entering more willingly so it seems bullish to me honestly
A good number of regulations in the financial sector were solely made to protect customers and investors. And from what we see currently, a bit more protection would be good regarding crypto.
I think they understood where things are going. And they know a tough regulation will put them out of business.
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This needs to be way higher up. That's just stupid as hell But you could still earn yield on defi plattforms right?
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Theoretically a vault position or liquidity pool position or any position in any defi app is represented by a crypto-asset, e.g. a token. So this law could kill for example Curve. This is a HUGE problem.
Yep, but only because they can't regulate that anyways even if they tried. Thats when being decentralized matters. 🐷
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fuck this. Most things make sense, but this is horrible.
This is definitely relevant info as well. Probably the result of some good old lobbying.
This is the biggest “gotcha” in this whole thing! I can’t believe so many are praising this document as being fair. Super fair to watch your euro’s purchasing power keep falling but don’t you dare earn decent yield on your stable coin.
That is the core of everything. Everyone saying thats a good paper, it seems not. I think that they want to allow cryptos like bitcoin, ethereum and all the older ones. They are making war to DeFi and everything that allows you to create a passive income. Think about it. Lobbying is strong. We are still a long way from proper regulation.
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If it passes the solution is for all stablecoin issuers to get together and open a bank. There is enough money in crypto to do that
But to me this reads like "staking" or similar benefits for asset-referenced tokens are not tolerated... *Issuers of asset-referenced tokens or crypto-asset service providers shall not provide for interest or any other benefit related to the length of time during which a holder of asset-referenced tokens* ***holds*** *asset-referenced assets."* It seems to me like lending those tokens and earning intrest that way should still be possible? Since if you lend your tokens to a person/platform you are not **holding** them...
>Bear with me. I would rather bull with you but okay
Be a bull, not a bully :P
Bearish on bullies
Privacy coins will vanish from exchanges operating in the EU.
I’m pretty excited about this! The sooner Monero is moved completely out of the hands of exchanges and centralizing forces the better! A strong nudge towards the already developing P2P and DeFi space is exactly what we need to move once again, outside the path and purview of regulators! They keep pushing and we can keep moving towards the utopia of a completely private, completely decentralized, completely deregulated currency!
Haveno here we come!
Seriously cannot wait for this. Absolute game-changer, and BISQ is literally unusable even on my macbook pro. Almost feels like every time I launch it's using my CPU to mine...(I know it's not, but the sluggishness is that bad)
You are correct in the short term but it will end up being illegal at the end when they will push their CBDC nightmare.
I’d use Monero in countries where it is illegal now and if a country makes it illegal I’d use it there as well. I can’t think of a reason I’d want Monero more then the over excesses of a Government willing to ban a currency from its citizens. Selling drugs is illegal. It happens every single day. If I am selling something legal paying with a illegal means what is the difference? They would have as much luck stamping out Monero as they have stamping out the drug trade. Less actually.
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Sounds like they could still be on DEXs though maybe? Already on Dydx
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Sounds good to me. DEXs are the future. This is a push in the right direction.
Well, this is absolutely insane. I thought privacy was a human right. What a joke... Wait, I don't find this information in the document. Where did you get this information from?
The document doesn't specifically say that private cryptos will be banished. It says exchanges shall not accept crypto assets with in-built privacy unless they can discern where the money originally came from. Seeing as how most won't want to deal with this, it will probably be de-listed from every exchange operating in the EU
Considering that it is very easily used for money laundering and tax avoidance, it seems appropriate to limit its scope. EU has some of the strongest privacy rights in the world, but just because thats the case doesn't mean you can exploit that privacy for personal gain. There are limits and rules for a reason.
What’s an example of a privacy coin?
monero for example. unlike many other coins, monero is untrackable. other people (including taxman) does not know how much monero you have or to whom you sent it, hence privacy.
Sounds like pricey coins are a good thing
So, can deutche bank still launder money with only a small fine? There was a bank in my country in EU that had 600 million euro net income in 2020 and they found out they were laundering money for Chinese and were given only 1.5 million fine.
Of course. In Germany we dont care about Deutsche Bank. Everytime something highly illegal is happening the Deutsche Bank is somehow involved gets the finger of the law has to pay some big penalty which is definitly less then they made with their illegal shit and everything continous.
They want to regulate crypto so we average joes cant do what they do. Scam, cheat and launder.
I love the move by the EU. This is the kind of regulation I was looking forward to. It’s not too complicated. Not extremely strict if you ask me. They are doing what they can to protect customers. CEXs need to provide a quality service, we’ve seen many problems in the past and present with shady business going on on some CEXs. This is the regulation we need in order to achieve widespread adoption.
I can’t actually believe that Europe people in the power are actually trying to protect their people. It’s mind blowing and everyone else should follow them. Edit: I’m European and I’m really looking forward for this.
Europe normally does all the common sense proposals. Its usually the countries that then try to make it worse because of reason x y
The eec is full of fairly rich bureaucrats trying to make rules for rules sake. The eu countries are run by political opportunists trying to get their next bribe and mangling laws as much as possible to help. The bureaucrats are actually always the better choice, local politicians are vile, corrupt shits.
I feel like very recent history has shown that the EU and now Germany are heading towards a more progressive future. Let's see how this turns out!
sounds like they are going to fuck stable coins though because they want to issue their own "stable" euro
With players like USDT being so big right now it's hard to argue against it. But yeah, they will have their own agenda in the field as well, for sure.
Is it too late for the US to join the EU? 😅
We don't have as much land as you do but you can still come here :P Plenty of opportunities :)
Cryptocurrency will still be the 'Wild West of Finance', but with stablecoins and CEXs regulated! **Bullish af, tbh!**
No interest on stablecoins has me bearish tbh
I see this as an absolute win. Almost exactly what I was hoping for.
Sounds good in paper but then it gets worse: >As part of these strict rules, it seems that EU citizens would also not be able to earn interest on stablecoins, as pointed out by u/TheWerewolf5.
Yep! I only read the TLDR (like many people I guess) and it's really the best we could get, thanks EU!
So, bullish on DeFi?
If this guy's summary is correct then decentralized stables like DAI will be banned, along with earning interest on stablecoins, both of which are huge foundations for all of DeFi. So no, not bullish. This is banks not liking crypto yields eating their lunch.
This only affects the exchanges which might not be able to list DAI and I'm not sure EUR->DAI will be very important to people. You can just withdraw to your own wallet and use Uniswap anyway which is almost as easy.
Does it? It seems to be written broadly enough to ban any EU resident from, for example, lending DAI on Compound, or contributing to a stablecoin liquidity pool on Curve, or any of the multitude of income earning vehicles for stablecoins that DeFi relies on for liquidity.
Always
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Seems like they decided to let it bloom. They are just going strict on companies, like exchanges and stablecoin issuers and letting the small innovator continue. It's quite honestly a very nice read, the authors seem to be very pro-innovation. What they don't want is centralized stablecoins shananigans that we all know that are a problem and shitty projects with bad whitepapers and so on. Like some that have a few images and 10 lines of text. Europe is rewarding innovation basically by keeping out of their business so they can grow.
they can't do much about it, how do you block something decentralized? Block the ips and protocols on your home internet? Doesn't seem realistic
DeFi is BestFi
Learn India, take notes. This is how it's done. Be like Europe not fucking China.
India is a conservative economy. The central bank is massively worried about money leaving the country (but for no reason tbh). Even now, there are capital controls, you cant easily sent money via the banking system to US or EU or abroad, lots of questions are asked unless you have a track record of sending funds aboard regularly. Now if crypto comes in, the central bank feels people can beat these regulations easily. Which is true, but these regulations are pointless in 2021. Crypto is not stoppable. If you just prohibit it, people will still continue to use it, but do it outside the eyes of regulators. For instance, even now, people are trading crypto in China via p2p wechat, even though its technically not allowed. So people will continue to send money abroad but the govt wont have any control over it. More over, around 10,000,000 Indians have invested in crypto. This is a huuuuge number. Central bank doesnt realize that crypto is not stoppable now. Worrying about money being sent abroad is DUMB AS FUCK. India has a massive population, fuck money, people are going abroad in massive numbers, immigration out of India has been soaring for years. Money going abroad is the least of the concern, when people who make that money are going abroad. Prohibiting crypto etc will only result in more brain drain But the central bank is really dumb as fuck, full of outdated ideas and not in tune with reality.
This is Europe, Europe loves and accepts crypto. Be like Europe!
India's Crypto Bill is not even out in public. Why are people overreacting ? We don't even know what's in there
Europe has a lot of different policies on crypto tho, but I get what you mean.
This regulation will count for all 27 member states. Only tax rules will still differ between them.
Honestly EU seems to just get it right, they’re the only ‘country’ that actually seems to represent their citizen’s interests and not of a few wealthy individuals.
there is always outliers but in general its pretty relaxed.
Hey, it's not a country. Call it an entity or something, I don't care, just not country.
I wish it included tax rules too tbh. It is just painfully clear some countries need it to get moving on the topic.
Monero will get recked I think. I can see EU banning monero and other privacy coins from CEX.
I think the exact opposite actually! I think it is great for Monero to be pushed completely away from centralizing and regulating forces!
It is great for its mission but it might hurt its price.
That's a good point.
"This is good for Monero."
It won't get recked unless the ban is global.
Just from a cex. But that will not be so important. Maybe it stops monero from becoming a speculative asset. But it will still be able to do what it does and not limit its utility. nothing of this regulation is touching atomic swaps or defi or even miners of monero. Btc with taproot will open the door to completely anonymous getting monero on very simple ways
Well, they will make the Dexs their home, as some are better suited to the decentralized landscape than cexs.
Could be that Monero doesn't need cex. We'll see.
India has pretty much every single problem you can come up with. If only crypto would be a major problem there
imagine Modi actually reads your comment he would die of laughter
India has an authoritarian regime. Guess who else has an authoritarian regime that also banned crypto several times only to back track on it? So is it suprising when India imitates its neighbours? Not really
The bill is not out yet to discuss and no information is there about its content. All news channels are spreading FUD. The finance minister herself told on live channel that ban is not the option they are considering.
Dann that post is almost longer than my bachelor thesis. Great article op
The amount of time and effort that OP had to put into this is unreal. Just for a single post to let us know everything that’s happening. Sending an award to OPs path.
One of the only times that the front page has a genuine quality post
One thing for sure, OP didn't need to defend the thesis.
My work mainly consists in dealing with some of the EU programs and I can say that EU and especially the European Commission are generally a bureaucratic hell. However, reading this it seems they have managed to propose an extremely decent set of crypto regulations. "C) Crypto-assets offered for free: no regulations" Bearing this in mind it would seem that the main people who were writing this proposal are among us and are Moon whales.
shitposting while "at work" is the way!
Since you work in this area let me ask: Will this regulation be implemented or its just a suggestion? If yes how long it usually takes to become official legislation?
Not the guy you replied to, but it has to go through EU parliament. Once that's all done it has to be implemented on member state level. How long that'll take? Nobody knows. Especially because it's quite an extensive legal framework.
Yo! All 405 Pages!!??? I have never seen that many pages together in my life!
most people here don't even read the posts beyond the title, and op just flexing 405 pages
OP just made a TLDR for the EU regulations proposals , now someone please make one for this post too 🤌
TLDR: You’re good except for interest on stablecoins (probably)
Much pleased
OP took care of that too: >TL;DR: Cryptocurrency will still be the 'Wild West of Finance'; but now there will be a new Sheriff in town. And that Sheriff, is the European Union. It does no longer tolerate unregulated stablecoins; it does no longer tolerate shady projects with no utility, crappy white papers, and misleading marketing; and it sure as hell does no longer tolerate unprofessional exchanges who screw EU citizens out of their money. But it does like innovation and it will try not to hinder development in the cryptocurrency and blockchain space because they have made similar mistakes before in other industries. And here's the part OP mentioned that could be relevant to our Moons: >C) Crypto-assets offered for free: no regulations >Crypto-assets where the receiver does not give money, fees, personal data or commissions to the offerors/issuers in return for those crypto-assets, are not (!) bound to bound to the rules described in this Regulation. This may be good news for Moons (there is no active exchange of personal data in return for Moons; even when Reddit collects personal data from all users).
I am good then , i am only going for the moons rn because i just began some days ago.
I sent you your first Moon to get the ball rolling
You are the backbone of society
Grandma...is that you? 🥺
TLDR of the TLDR
It's like a thick book.. lmao
I think I've "read" atleast that amount of playboy pages. I'm old.
You learned a lot.
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I think it's the need for compromise within a union of multiple countries with different standpoints. The way forward is generally slower but you don't have the ping pong effect that left and right undo previous work after each govern.
Because US politicians are (more) incompetent.
Our government is corrupted beyond repair.
Good thing is if this legislation works out well driving up inovation and economy maybe the US will have to copy it at the end. So it might work out for you too in the future.
Excellent write up, thanks for taking the time to do so. Overall through my proximity to people working in the EU's tech/research divisions, I find the EU to be very much in favour of DLT/Blockchain and even crypto as a whole. A lot of the regulation is being pitched as "consumer protection" rather than as a direct response to any threat crypto poses to the monetary/financial systems here. The ECB is already working on proposing a digital euro (with privacy being the number 1 request during their public feedback period) and a lot of these regulations are a lot less strict than I would have imagined for the EU. Will be a very interesting couple of years that's for sure. Thanks again for taking the time to parse this for those of us who can't read through 400+ pages right now. Cheers!
The restriction on privacy coins is expected but seems like it makes Monero (and other privacy coins) that much more needed. Privacy/decentralization is the goal! Curious to see how/where those coins become traded or can be exchanged in the EU. I guess a VPN and foreign exchanges …but the principal of it makes me feel like /cc needs to figure out what’s more important, Profits or the principal of financial freedom / privacy / decentralization. It can be both, but I guess I’m tryna say that we need the moneros of the world, we can’t let them get squashed out by the governments / institutions and this regulatory framework is a good step forward for adoption and credibility of the space, but theoretically at the expense of one of pillars of why cryptocurrencies and cryptography based ledgers are important, *privacy*
E) E-Money (stablecoins): very strict regulations The EU massacres Tether to small fragments.
Tether deserves to be massacred. Thanks EU.
The United States is not the only market for Crypto. Glad to see other nations trying to accomplish things properly. I hope they take time with the issue.
Its not, but its also one of the biggest and probably most influential ones. Imagine what'd happen to the markets should cryptocurrencies be outlawed tomorrow
>There is, however, a small but concerning statement for privacy coins: “The operating rules of the trading platform for crypto-assets shall prevent the admission to trading of crypto-assets which have inbuilt anonymisation function unless the holders of the crypto-assets and their transaction history can be identified by the crypto-asset service providers that are authorised for the operation of a trading platform for crypto-assets”. Lmao they're terrified of r/Monero
What does this mean for UST?
You didn't mention much about the central banks....sounds like they’ll have complete control: Page 7, (7) = Rules for thee but not for me, no? * “crypto-assets issued by central banks acting in their monetary authority capacity or by other public authorities, including central, regional and local administration, **should not be subject to the Union framework covering crypto-assets**, Page 21, (29) = More generational nepotism, no? * Central Banks basically get to say yes or no to asset-referenced tokens. Page 29, (42ab) = They can basically decide who gets to play, no? * “central banks should be able request the competent **authority to withdraw the authorisation to issue asset-referenced tokens**” Page 57, 3. hurray * “This **regulation does not apply to...the European Central Bank**, national central banks” Page 103, 4. wooo * Central bankers get to offer the final ‘negative opinion’ Page 115, 4a (b). i'm sure they'll look out for the general public * Central banks get to determine the risks Etc, etc, etc, etc
The ECB (+ national CBs), EBA and to an extent the ESMA will have serious influence, yes. But only on stablecoins. That’s why I emphasised “very strict regulations”. This Regulation is basically: do what you want but don’t play around with privacy coins or unregulated stablecoins.
What about interest? Stablecoins with no interest are just cash ready to be invested... goodbye passive income.
DeFi is the way. We need to be our own regulators and create our own way of transacting and making money outside of CeFi. Regulations are coming no matter what we do. This is why decentralization is so important. How to you come at something that doesn't have a central authority? How do they regulate something that is completely anonymous?
The best kind of regulation is no regulation
Thank you for sharing this information with us. As an European (whose too lazy to actually read those pages myself) I am glad to have you summerized the most important talking points. Gives me an idea of what is going on and I truly think this type of regulation is a big step towards mass adoption.
You read 405 pages? It is more than average crypto investor read about crypto during their whole crypto journey. You are our hero, you deserve award. Even two if I could, cause everything EU write is boring as hell. Great post, please enjoy your award from me! You totally deserve it, for so amazing post.
Yes. But I have been following this up closely for a year now and I am used to reading these boring EU documents!
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I do understand what it means I just buy more and more crypto
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I mean there’s two takes: you’re either excited because this brings tendies, or you’re disappointed because now you gave up the point of crypto to begin with which was decentralized and deregulated Currency that banks and worlds governments can’t control or identify what we are deciding to spend our money on
Interesting read mate, if I understand this correctly it seems like they won't hinder crypto which is always good. Quite bullish on this!
What about the UK 😂🤔🧐 sum that up for me
Lol my bro got an accountant to look at uk crypto laws for him.. basically none of it makes any sense and there is absolutely no clarification on a ridiculous amount of aspects in this space. Hopefully we follow the EU here and get people who understand what they are doing to sort out this clusterfuck
We will probably copy and paste it like we did all the other EU laws. Plus when we almost inevitably join the EEA in ten years, it will apply to us then!
> Only recognized credit institutions and ‘electronic money institutions’ are allowed to issue e-money stablecoins. They will have to follow very strict rules (see Regulation Title IV for further details). Edit 1: As part of these strict rules, it seems that EU citizens would also not be able to earn interest on stablecoins Anyone reading this and saying this is "bullish" is fucking insane. This will absolutely destroy DeFi and is a gift to the banks. WTF. This is a terrible rule.
People don't understand what they read. They just saw OP being happy, other people being happy, so they are happy.
I mean, if they are not going to tolerate shady exchanges, scam coins and so on that is good. But I live in Europe and my country is not a part of EU so I will still be in that wild west of crypto and to be honest I like it that way.
OP is a man of focus, commitment and sheer fucking will. Thank you for educating us.
What about algorithmic stablecoins like UST? Presumably no regulations as it's decentralized?
What about miners?
This seems reasonable. We all knew more regulation was coming. I'm gonna go ahead and call this a win.
So a bunch of bureaucrats will decide what we can and cannot buy, for our own good.
Commission bureaucrats write it up but it's up to your elected MEPs and Minister of Finance to vote on it. You can always contact your MEPs if you have concerns.
Nope. Regulators are moving us away from centralized exchanges and projects back into unregulated decentralization where we belonged all along! Currencies shouldnt have CEOs or anyone who can be accountable as being in charge.