Accointing Weekly | July 1

Our weekly crypto newsletter is here! Learn more about EU’s decision on the BTC future, Spain’s new crypto tax model, and Tether’s audit. What’s more, we explain what BTC volcano bonds are.

EU Reaches Agreement on MiCA Regulation

After nearly two years of negotiations, the European Parliament, the Council, and the Commission have agreed on the key points for comprehensive regulation of the crypto industry in the 27 EU member states. With this, the EU is taking a pioneering role and creating framework conditions for a sector that has so far been quite unregulated worldwide. In doing so, the Commission has laid down new provisions for consumer protection through better control of crypto service providers (CASPs) and stablecoins and also wants trading exchanges to disclose the environmental aspect of the crypto assets offered more transparently in the future. 

Crypto service providers need a license to operate in the European market. In this context, national authorities are initially responsible for approvals and should contribute to better control through a regular exchange of information with the European Securities and Markets Authority (ESMA). NFTs were initially not the content of the new regulation. However, the EU wants to conduct a comprehensive assessment within 18 months and, if necessary, create appropriate guidelines for the NFT markets as well. Stablecoins are supposed to prove in the future that they have sufficient reserves so that consumers are protected from catastrophes, like the TerraLabs-induced one. 

The preliminary agreement on MiCA still has to go through the Council and the European Parliament before it is estimated to come into force at the end of 2023.

Spain’s New Crypto Tax Model Wants to Know Your Crypto Balance

Spain recently introduced new crypto reporting and taxation requirements for crypto traders. Spain’s Treasury’s new rules foresee the disclosure of all cryptocurrency holdings to the tax authorities, enclosing their value in Euros and details of transactions with the addresses of origin and destination. 

This is different from the previous proposals, where holders only had to declare the earnings of their trades without needing to present their crypto holdings. These rules will further apply to cryptocurrency exchanges that would also have to send this data to Spanish tax regulators. You would be exempt from reporting your crypto holdings to the tax authorities as long as they are under €50,000 ($52,854).

Tether to Undergo Full Audit

Tether, the issuer of the largest stablecoin, USDT, is undertaking a full audit of its reserves. The audit is a bid to provide confidence and transparency around Tether’s funds backing the stablecoin.

During an interview with Euromoney, Tether CTO Paolo Ardoino claimed that the audit will be carried out by a top 12 accounting firm called MHA. According to him, the Big Four accounting firms weren’t a good fit for this audit as they’re still too wary about crypto assets because of the rapidly changing regulations in the space. 

The decision follows the recent de-pegging of TerraLabs’ algorithmic stablecoin UST, which has put the crypto space on tenterhooks. Pressure on stablecoins and crypto projects has been mounting as trust and reassurance have never been valued higher by investors. 

With USDT boasting a 66 billion market cap, the result of an audit on such a prominent cryptocurrency could have a high impact on the rest of the market. Hodlers have welcomed the news of an audit as details about the Tether’s reserves are often in the shadow. 

BTC Volcano Bonds

El Salvador’s president Nayib Bukele has continuously proven to be one of the biggest supporters of Bitcoin. As a result, El Salvador was the first country to recognize Bitcoin as a legal tender, paving the way for the wide adoption of cryptocurrencies. 

But the president didn’t stop there. Mr. Bukele wanted to create the first “Bitcoin City” near the Conchagua volcano. But how was that supposed to happen? Bitfinex and El Salvador, in partnership with Blockstream, issued $1 billion in tokenized U.S.-dollar denominated 10-year bonds. These Volcano Bonds would help build a volcano-powered infrastructure for Bitcoin mining.

Were the Bitcoin Volcano Bonds a good idea? How will it play out in the long term for El Salvador? Read our article to find out more!

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