Canada Adopts International Crypto Tax Reporting Standard
Canada is aimed at having the OECD standard for crypto asset tax reporting in place by 2027, as agreed with 46 countries.
The European System Risk Board (ESRB), a body that oversees finances and regulation within the European Central Bank, has urged for tighter regulation in the cryptocurrency space.
The financial watchdog released a report that indicated a need for continued oversight and monitoring of digital currencies. Announcing three priorities, the ERCB points to decentralised finance (DeFi) and smart contracts in particular. The priorities are to strengthen monitoring and increase surveillance capacity, identify, assess, and mitigate risks from large crypto-asset firms, and monitor market developments to maintain financial stability.
This comes in spite of comments that the digital currency industry has little impact on systems in traditional finance. While there aren’t many links between traditional finance and DeFi, the watchdog notes that the correlation has been increasing slowly:
“Even though the crypto-asset sector might not be systemic today, authorities should be able to understand the developments of the sector and their potential implications for financial stability.”
Europe’s current crypto regulation act
The recent crypto bill voted in, the Markets in Crypto Assets (MiCA) act, is a legal infrastructure regulating the space. While it is in place to enforce a standard of regulation across Europe for stablecoins and cryptocurrency, MiCA does not indicate law around DeFi and smart contracts.
Previously, the European Central Bank had stated the law needs to be addressed “urgently”. Over the last few months, the need to regulate has remained but there seems to be less urgency for it. The ERCB’s notice points to the need to mitigate the risks, especially as the cryptocurrency industry might “thaw” from the currency crypto winter. One area as recommended action in the report is to promote EU-wide knowledge of exchanges and monitoring the market. This would require thorough oversight with a particular focus on operational resilience to protect users from a failure of an exchange, lending acticity, and digital asset staking.