Digital Currencies Governance Group (DCGG): October Newsletter

European Union

Digital Currencies Governance Group (DCGG) Responds to the Joint ESAs Consultation on Guidelines on Classification under MiCA

On October 12, the European Supervisory Authorities (ESAs - European Banking Authority (EBA) , European Securities and Markets Authority (ESMA) and EIOPA) on their draft guidelines under Article 97(1) of Regulation (EU) 2023/1114, which aim to standardise templates and classification tests for crypto-assets under the EU’s Markets in Crypto-Assets (MiCA) framework. This consultation is essential for ensuring that crypto-asset classifications remain clear and effective across all EU member states, promoting regulatory consistency, transparency, and consumer trust in the European crypto market.

DCGG took the opportunity to highlight the need for greater flexibility within the proposed templates to accommodate more complex or evolving crypto-asset types, we advocated for clear criteria to prevent classification inconsistencies across jurisdictions and national interpretations, and recommended enhanced guidance for categorising unique assets like NFTs. Furthermore, we underscored the importance of regulatory convergence to balance oversight with innovation, ensuring that MiCA can effectively support both market growth and innovation and a secure, well-defined digital asset landscape in the EU.?

The Guidelines are expected to apply two months after the publication of its translation in all official languages of the EU.

Digital Currencies Governance Group (DCGG) Responds to the European Banking Authority (EBA) Consultation on the Supervision of ARTs and EMTs under MiCA

On October 15, the European Banking Authority’s (EBA) concluded the consultation process on its draft guidelines for supervisory templates under Titles III and IV of the Markets in Crypto-Assets Regulation (MiCAR). This consultation aims to create a standardised framework for data reporting to ensure that crypto-asset issuers maintain compliance across EU jurisdictions, fostering a reliable and cohesive regulatory environment.

DCGG expressed support for the EBA’s efforts to streamline data collection and reporting while highlighting the need for flexibility in meeting complex requirements—particularly concerning cross-border transactions, non-custodial wallet activities, and transaction volume metrics. We extended a recommendation for adjustments to prevent potential data distortions that could lead to regulatory misinterpretations. In addition, we suggested an extension of the proposed reconciliation timelines in order to allow issuers sufficient time to verify and accurately consolidate transaction data with the objective to better support comprehensive data accuracy across multiple platforms and prevent compliance burdens.?

The Guidelines will apply two months after the publication of its translation in all official languages of the EU.

Digital Currencies Governance Group (DCGG) attends European Banking Authority (EBA) AML/CFT Roundtable

On October 24, the European Banking Authority (EBA) held an industry roundtable concerning the European Commission’s ‘Call for Advice’ from March 12, 2024, regarding the future of the EU AML/CFT framework. The day-long roundtable also included separate sessions for issuers of e-money tokens (EMTs) and crypto-asset service providers (CASPs) Key topics included risk assessment, customer due diligence (CDD), enforcement, and specific issues affecting key sectors, including payment institutions.

The discussion on risk assessment emphasised the need for standardised data collection to enhance efficiency and competitiveness, while addressing challenges in aligning FATF risk assessments with EU rules and concerns that smaller financial institutions could be adversely affected by AMLA's direct supervision criteria.

On CDD, the industry stressed the need for clearer, consumer-friendly verification methods, such as video verification, due to the inconsistencies in eIDAS certification across EU jurisdictions, while also suggesting the extension of Simplified Due Diligence (SDD) to cases with accessible, reliable external sources like government databases, amidst concerns over the costs associated with eIDAS.

The next steps include the publication of the draft RTS for consultation around February 2025, the conclusion of the public consultation in May 2025, and the EBA’s response to the Call for Advice expected in October 2025.

United Kingdom

Digital Currencies Governance Group (DCGG) Responds to the Bank of England Discussion Paper on Innovation in Money and Payments

On October 31, the Bank of England officially closed the 3-month consultation period on? its Approach to Innovation in Money and Payments, which seeks input on how digital technologies like digital ledger technology (DLT), programmable platforms, and digital assets can be safely integrated into the UK’s financial system. This is a key discussion paper exploring the integration of programmable platforms, DLT, tokenized deposits, and stablecoins within the UK financial system.

DCGG welcomed the opportunity to provide feedback to the BoE paper and underscored the transformative potential of DLT for enhancing efficiency, transparency, and security in payment systems. We stressed the need for regulatory clarity to drive innovation while maintaining robust consumer protections, and recommended a measured, forward-looking approach to support both market competition and stability. This consultation marks an essential step toward shaping a more resilient, secure, and competitive future for digital payments in the UK.

Autumn Budget Commitment to Enhancing Crypto-related Tax Transparency in the UK

On October 30, Chancellor of the Exchequer Rachel Reeves MP delivered the 2024 Autumn Budget speech in the House of Commons, marking a landmark occasion for the Labour Party, being their first Budget in 14 years and the first ever delivered by a female Chancellor. Of key relevance to the UK digital assets market is the UK Government's commitment to boost tax transparency for crypto through the OECD’s Cryptoasset Reporting Framework (CARF). The HMRC has issued a summary of the feedback received from its latest CARF consultation from earlier this year (to which DCGG contributed to) and is now looking for additional technical input on the draft regulations. This initiative aims to establish standardised tax reporting for cryptoassets in the UK, with the consultation running until January 10, 2025.

The Budget also proposed an increase in Capital Gains Tax (CGT) rates, raising them from 10% to 18% for lower-rate taxpayers and from 20% to 24% for higher-rate taxpayers, which will also apply to crypto gains. Although this increase is considerable, the higher proposed rate of 28% was not implemented, offering some relief for investors.

The Government has also expressed its intention to support the growth of digital technologies, suggesting possible future adjustments in crypto regulations.?