Digital Currencies Governance Group Limited

…1 DCGG Response to the European Commission’s Call for Evidence for Impact Assessment and Consultation on the EU rules on administrative cooperation in the field of taxation (recast) About DCGG The Digital Currencies Governance Group (“DCGG”) is a membership association that represents significant firms in the digital assets sector, including Tether, Ledger and TRON. We actively engage with policymakers across four continents to share insights and provide input to the regulatory and policy development process. These regions include Europe (the EU and the UK), Latin America, Asia and Africa.

…and policy development process. These regions include Europe (the EU and the UK), Latin America, Asia and Africa. Our mission is to facilitate an open dialogue and encourage communication between policymakers and industry experts to support the design of a sound and proportionate regulatory framework that ensures safety for all market participants Views on the proposed DAC Simplification We welcome the Commission’s initiative to consolidate and simplify the Directive on Administrative Cooperation (DAC), in line with the Better Regulation agenda and the objectives of reducing administrative burden, eliminating inconsistencies and improving legal clarity and coherence for all market participants. We particularly welcome the focus on addressing fragmentation risks and inefficient or overlapping reporting obligations, as highlighted in the recent evaluation of the DAC framework.

…and inefficient or overlapping reporting obligations, as highlighted in the recent evaluation of the DAC framework. In this context, we take the opportunity to draw the Commission’s attention to a significant issue arising under DAC8, specifically the definition and scope of “crypto-asset operators”, which warrants clarification as part of the EC’s envisaged consolidation and simplification initiative. The DAC8 regime introduces reporting obligations for “reporting crypto-asset service providers”, a category encompassing both crypto-asset service providers (CASPs) authorised under Regulation (EU) 2023/1114 (MiCA) and “crypto-asset operators” (CAOs) that fall outside MiCA’s Ref. Ares(2026)1503197 - 10/02/2026 2 regulatory perimeter.

“crypto-asset operators” (CAOs) that fall outside MiCA’s Ref. Ares(2026)1503197 - 10/02/2026 2 regulatory perimeter. While we understand that the intention of this approach is to ensure comprehensive tax transparency in the crypto-asset ecosystem, the “crypto-asset operator” concept represents a novel and broadly framed category that is not anchored in an existing EU regulatory framework. As currently drafted, the definition of “crypto-asset operator” relies on functional concepts such as the facilitation of crypto-asset transactions, without sufficient clarification of the degree of intermediation, control or access to data required for an entity to fall within scope.

…clarification of the degree of intermediation, control or access to data required for an entity to fall within scope. In our view, this creates a material risk of divergent interpretation across Member States at the stage of national transposition and enforcement, which runs counter to the Commission’s stated objective of reducing fragmentation and increasing legal certainty. The EC and Council DAC evaluation report has already highlighted that broadly formulated provisions, while intended to ensure sufficient coverage, can lead to interpretative challenges and inconsistent application across Member States, thereby increasing administrative burdens and undermining the level playing field. The current formulation of the “crypto-asset operator” concept risks reproducing these challenges within DAC8.

The current formulation of the “crypto-asset operator” concept risks reproducing these challenges within DAC8. DCGG notes that MiCA establishes a harmonised and carefully calibrated regulatory perimeter for crypto-asset services within the Union. By contrast, DAC8 introduces a parallel category of entities that is not aligned with MiCA’s definitions and scope. While we understand that DAC8 is a tax transparency instrument rather than a market regulation, greater alignment with MiCA is nevertheless very important to preserve the overall internal coherence of the EU crypto-asset framework.

…with MiCA is nevertheless very important to preserve the overall internal coherence of the EU crypto-asset framework. Maintaining two partially overlapping but ultimately non-aligned concepts of crypto- asset service provision risks creating uncertainty for market participants and national competent authorities alike, particularly where entities may be considered out of scope for regulatory purposes under MiCA but in scope for extensive reporting obligations under DAC8. We are also concerned that reporting obligations under DAC8 require reporting entities to identify reportable users, collect personal and tax-residence information (including tax identification numbers) and aggregate transaction data. Due to the lack of clarity in the definition, certain entities, such as software-based or technical service providers, could be brought within the scope of the CAO definition.

…such as software-based or technical service providers, could be brought within the scope of the CAO definition. even though they neither intermediate transactions nor act as counterparties or brokers and do not have access to user transaction data or the information 3 required to fulfil reporting obligations. We caution that imposing reporting obligations on entities that are structurally unable to obtain the relevant information raises concerns from both a proportionality and effectiveness perspective. Where an entity cannot access or control the data necessary to comply with DAC8 requirements, reporting obligations cannot meaningfully contribute to the objective of improving tax transparency and may instead result in unnecessary administrative burden without corresponding enforcement benefits.

…transparency and may instead result in unnecessary administrative burden without corresponding enforcement benefits. In the crypto ecosystem, certain applications provide users with tools to manage their own crypto- assets and to access third-party services. These applications typically do not hold or control user funds, do not execute or settle transactions, do not act as intermediaries and do not have access to transaction data generated by third-party service providers. Users retain exclusive control over their private keys and transact directly with third parties or on-chain protocols. Functionally, such applications are closer to technical interfaces or gateways enabling user choice than to transactional intermediaries.

…are closer to technical interfaces or gateways enabling user choice than to transactional intermediaries. Against this backdrop, we are concerned that including such business models within the scope of the CAO definition would risk imposing KYC- and CRS-style reporting obligations on entities that neither facilitate transactions nor possess the data required to comply. This could force fundamental and disproportionate changes to business models, stifle innovation and deter entry into the EU market, with potential negative implications for competitiveness in a highly global and digitalised sector. In DCGG’s view, alignment with international standards is key when looking at an inherently cross- border sector like crypto. DAC8 aims to align with the OECD Crypto-Asset Reporting Framework (CARF), which provides important guidance on the scope of reporting entities.

…the OECD Crypto-Asset Reporting Framework (CARF), which provides important guidance on the scope of reporting entities. We note that the OECD’s 2023 CARF Commentary explicitly excludes from the scope of reporting obligations entities that solely create or sell software or applications allowing users to trade crypto-assets on their own behalf, where those entities do not effectuate transactions and do not maintain a reporting relationship with users. To preserve alignment with international standards and ensure consistency with the Commission’s own assessment that DAC benefits from close alignment with global frameworks, a consolidated DAC would benefit from explicitly reflecting this distinction. DAC8 also extends reporting obligations to certain non-fungible tokens (NFTs used for payment or investment purposes), notwithstanding that NFTs are generally excluded from MiCA’s scope.

(NFTs used for payment or investment purposes), notwithstanding that NFTs are generally excluded from MiCA’s scope. 4 DCGG notes that NFTs represent a highly heterogeneous and evolving category of digital assets, often closer to digital collectibles than to financial instruments. In practice, distinguishing whether an NFT is held for investment or other purposes may require case-by-case assessments, increasing complexity and the risk of inconsistent application across Member States. Further clarification or narrowing of NFT-related reporting obligations would support the objective of simplifying the DAC framework and reducing inefficient or inconsistent reporting, particularly in a nascent market segment that continues to evolve rapidly.

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originalus šaltinis (PDF) ↗

…1 DCGG Response to the European Commission’s Call for Evidence for Impact Assessment and Consultation on the EU rules on administrative cooperation in the field of taxation (recast) About DCGG The Digital Currencies Governance Group (“DCGG”) is a membership association that represents significant firms in the digital assets sector, including Tether, Ledger and TRON. We actively engage with policymakers across four continents to share insights and provide input to the regulatory and policy development process. These regions include Europe (the EU and the UK), Latin America, Asia and Africa.

…and policy development process. These regions include Europe (the EU and the UK), Latin America, Asia and Africa. Our mission is to facilitate an open dialogue and encourage communication between policymakers and industry experts to support the design of a sound and proportionate regulatory framework that ensures safety for all market participants Views on the proposed DAC Simplification We welcome the Commission’s initiative to consolidate and simplify the Directive on Administrative Cooperation (DAC), in line with the Better Regulation agenda and the objectives of reducing administrative burden, eliminating inconsistencies and improving legal clarity and coherence for all market participants. We particularly welcome the focus on addressing fragmentation risks and inefficient or overlapping reporting obligations, as highlighted in the recent evaluation of the DAC framework.

…and inefficient or overlapping reporting obligations, as highlighted in the recent evaluation of the DAC framework. In this context, we take the opportunity to draw the Commission’s attention to a significant issue arising under DAC8, specifically the definition and scope of “crypto-asset operators”, which warrants clarification as part of the EC’s envisaged consolidation and simplification initiative. The DAC8 regime introduces reporting obligations for “reporting crypto-asset service providers”, a category encompassing both crypto-asset service providers (CASPs) authorised under Regulation (EU) 2023/1114 (MiCA) and “crypto-asset operators” (CAOs) that fall outside MiCA’s Ref. Ares(2026)1784463 - 17/02/2026 2 regulatory perimeter.

“crypto-asset operators” (CAOs) that fall outside MiCA’s Ref. Ares(2026)1784463 - 17/02/2026 2 regulatory perimeter. While we understand that the intention of this approach is to ensure comprehensive tax transparency in the crypto-asset ecosystem, the “crypto-asset operator” concept represents a novel and broadly framed category that is not anchored in an existing EU regulatory framework. As currently drafted, the definition of “crypto-asset operator” relies on functional concepts such as the facilitation of crypto-asset transactions, without sufficient clarification of the degree of intermediation, control or access to data required for an entity to fall within scope.

…clarification of the degree of intermediation, control or access to data required for an entity to fall within scope. In our view, this creates a material risk of divergent interpretation across Member States at the stage of national transposition and enforcement, which runs counter to the Commission’s stated objective of reducing fragmentation and increasing legal certainty. The EC and Council DAC evaluation report has already highlighted that broadly formulated provisions, while intended to ensure sufficient coverage, can lead to interpretative challenges and inconsistent application across Member States, thereby increasing administrative burdens and undermining the level playing field. The current formulation of the “crypto-asset operator” concept risks reproducing these challenges within DAC8.

The current formulation of the “crypto-asset operator” concept risks reproducing these challenges within DAC8. DCGG notes that MiCA establishes a harmonised and carefully calibrated regulatory perimeter for crypto-asset services within the Union. By contrast, DAC8 introduces a parallel category of entities that is not aligned with MiCA’s definitions and scope. While we understand that DAC8 is a tax transparency instrument rather than a market regulation, greater alignment with MiCA is nevertheless very important to preserve the overall internal coherence of the EU crypto-asset framework.

…with MiCA is nevertheless very important to preserve the overall internal coherence of the EU crypto-asset framework. Maintaining two partially overlapping but ultimately non-aligned concepts of crypto- asset service provision risks creating uncertainty for market participants and national competent authorities alike, particularly where entities may be considered out of scope for regulatory purposes under MiCA but in scope for extensive reporting obligations under DAC8. We are also concerned that reporting obligations under DAC8 require reporting entities to identify reportable users, collect personal and tax-residence information (including tax identification numbers) and aggregate transaction data. Due to the lack of clarity in the definition, certain entities, such as software-based or technical service providers, could be brought within the scope of the CAO definition.

…such as software-based or technical service providers, could be brought within the scope of the CAO definition. even though they neither intermediate transactions nor act as counterparties or brokers and do not have access to user transaction data or the information 3 required to fulfil reporting obligations. We caution that imposing reporting obligations on entities that are structurally unable to obtain the relevant information raises concerns from both a proportionality and effectiveness perspective. Where an entity cannot access or control the data necessary to comply with DAC8 requirements, reporting obligations cannot meaningfully contribute to the objective of improving tax transparency and may instead result in unnecessary administrative burden without corresponding enforcement benefits.

…transparency and may instead result in unnecessary administrative burden without corresponding enforcement benefits. In the crypto ecosystem, certain applications provide users with tools to manage their own crypto- assets and to access third-party services. These applications typically do not hold or control user funds, do not execute or settle transactions, do not act as intermediaries and do not have access to transaction data generated by third-party service providers. Users retain exclusive control over their private keys and transact directly with third parties or on-chain protocols. Functionally, such applications are closer to technical interfaces or gateways enabling user choice than to transactional intermediaries.

…are closer to technical interfaces or gateways enabling user choice than to transactional intermediaries. Against this backdrop, we are concerned that including such business models within the scope of the CAO definition would risk imposing KYC- and CRS-style reporting obligations on entities that neither facilitate transactions nor possess the data required to comply. This could force fundamental and disproportionate changes to business models, stifle innovation and deter entry into the EU market, with potential negative implications for competitiveness in a highly global and digitalised sector. In DCGG’s view, alignment with international standards is key when looking at an inherently cross- border sector like crypto. DAC8 aims to align with the OECD Crypto-Asset Reporting Framework (CARF), which provides important guidance on the scope of reporting entities.

…the OECD Crypto-Asset Reporting Framework (CARF), which provides important guidance on the scope of reporting entities. We note that the OECD’s 2023 CARF Commentary explicitly excludes from the scope of reporting obligations entities that solely create or sell software or applications allowing users to trade crypto-assets on their own behalf, where those entities do not effectuate transactions and do not maintain a reporting relationship with users. To preserve alignment with international standards and ensure consistency with the Commission’s own assessment that DAC benefits from close alignment with global frameworks, a consolidated DAC would benefit from explicitly reflecting this distinction. DAC8 also extends reporting obligations to certain non-fungible tokens (NFTs used for payment or investment purposes), notwithstanding that NFTs are generally excluded from MiCA’s scope.

(NFTs used for payment or investment purposes), notwithstanding that NFTs are generally excluded from MiCA’s scope. 4 DCGG notes that NFTs represent a highly heterogeneous and evolving category of digital assets, often closer to digital collectibles than to financial instruments. In practice, distinguishing whether an NFT is held for investment or other purposes may require case-by-case assessments, increasing complexity and the risk of inconsistent application across Member States. Further clarification or narrowing of NFT-related reporting obligations would support the objective of simplifying the DAC framework and reducing inefficient or inconsistent reporting, particularly in a nascent market segment that continues to evolve rapidly.

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originalus šaltinis (PDF) ↗

Digital Currencies Governance Group 2023 https://dcgg.eu/ 1 Tax fraud & evasion – strengthening rules on administrative cooperation and expanding the exchange of information: Feedback from DCGG March 2023 The Digital Currencies Governance Group (DCGG) represents the interests of the crypto-asset ecosystem and advocates for an innovation-friendly regulatory environment that ensures safety for all market participants. DCGG seeks to facilitate an open dialogue and encourages communication between political representatives and digital currency experts to ensure that legislation supports both political objectives and innovation in the digital-asset space. To this end, DCGG regularly engages with policy- makers and regulators both at the EU and national levels. DCGG represents a broad spectrum of stakeholders in the crypto-asset ecosystem.

…both at the EU and national levels. DCGG represents a broad spectrum of stakeholders in the crypto-asset ecosystem. Among our Members there are Tether – currently the largest stablecoin issuer worldwide, Ledger – a leading technological provider for self-custody, Bitfinex – a large-scale crypto-assets exchange and Iden3 - a technological provider for self-sovereign identity management. Introduction The Digital Currencies Governance Group (DCGG) and its members welcome the European Commission’s efforts and objective to amend the Directive for Administrative Cooperation (henceforth, DAC8) to enhance the current tax system to create a more fair and transparent framework for EU member states, and facilitate compliance.

…the current tax system to create a more fair and transparent framework for EU member states, and facilitate compliance. We understand that bringing cryptoassets within the scope of this Directive and further developing the framework for automatic exchange of information is a necessary step within the context of their increased adoption and use within the Union. Nevertheless, industry representatives are concerned that this proposal goes significantly beyond the recommendations of the Organisation for Economic Cooperation and Development (OECD), with certain provisions in the DAC8 proposal that effectively position the sector in a disadvantage in comparison to traditional finance, with proposed entities in scope and reporting requirements for crypto-asset service providers (CASPs) being significantly broader.

…entities in scope and reporting requirements for crypto-asset service providers (CASPs) being significantly broader. DCGG’s members are worried that this proposed approach to the scope of operators subject to DAC8 may place a disproportionate burden on the crypto-assets industry compared to more established traditional financial infrastructures. The potential outcome of significantly increased administrative burden could disincentivise these nascent businesses from entering the EU market, which could have negative economic implications long-term in the context of increased digitalisation and international competition. Striking the right balance between strengthening transparency within the overall tax framework of the Ref.

…competition. Striking the right balance between strengthening transparency within the overall tax framework of the Ref. Ares(2023)2276373 - 29/03/2023 Digital Currencies Governance Group 2023 https://dcgg.eu/ 2 Union, and enabling the industry’s growth and innovation in the market, which requires a more calculated, moderate approach. Against the backdrop of these concerns and as representatives of some of the largest cryptoasset industry players, we would like to provide some recommendations to the Commission based on the DAC8 proposal in order to inform the forthcoming debate between the EU institutions on the adoption and enforcement of this landmark expansion of the European taxation framework.

EU institutions on the adoption and enforcement of this landmark expansion of the European taxation framework. Scope Crypto products and activities have been subject to widespread adoption in recent years and these have a large variety of use-cases and fulfil diverse consumer demands that oftentimes go beyond payment or trade. DCGG members concur that regulation is needed in order to safeguard consumer protection, market stability and minimise vulnerability to tax fraud, however such regulation must be fair and fit-for-purpose, taking into account the different aspects and uses of these products and services, where a relevant approach could be applied.

…into account the different aspects and uses of these products and services, where a relevant approach could be applied. • Lack of harmonisation over the definition of “crypto-asset operator” In the context of DAC8, DCGG recommends that the Commission adopt a more harmonised approach by using the definition of CASP within the meaning of the MiCA regulation instead of introducing the granular definition of what the proposal refers to as “crypto-asset operator” which is very broad and would lead to legal uncertainty. Beyond what is set out in MiCA on the definition of a CASP, the term “crypto-asset operator” covers a vast variety of entities, which could result in potential errors of interpretation that could affect compliance.

…a vast variety of entities, which could result in potential errors of interpretation that could affect compliance. Lack of clarity of which entities are in scope and to what extent could jeopardise this proposal’s objective to improve tax collection procedures by EU tax administrations. Thus, for the sake of legal clarity and in order to protect the harmonisation of the crypto-asset regulations within the EU, the DAC8 should mirror and follow closely the definition of CASP as defined within the MiCA regulation.

…within the EU, the DAC8 should mirror and follow closely the definition of CASP as defined within the MiCA regulation. • A case-by-case analysis for a better differentiation between crypto products To avoid legal misinterpretation, in DCGG’s view, it is crucial to establish a differentiation between classes of crypto products and services taking into account use-cases, underlying technology, design and functionalities, as well as internal monitoring, controls, and ingrained features that facilitate the exchange of information. These are tangible criterions that could be used as a basis for the competent tax authority to determine a risk profile, and thus avoid placing undue burdens on low-risk products, investments and transactions.

…to determine a risk profile, and thus avoid placing undue burdens on low-risk products, investments and transactions. Overall, a more granular breakdown of in-scope entities, based on their inherent features, would better facilitate the objective for improved tax transparency, and would grant the necessary legal clarity to operators. Digital Currencies Governance Group 2023 https://dcgg.eu/ 3 Reporting requirements DCGG’s members are concerned that the DAC8 proposal lays out more restricting requirements for the reporting of transactions for tax purposes than the previously outlined (through DAC2 and DAC6) rules for traditional financial institutions. If these requirements are implemented, crypto operators would undergo an overwhelming administrative burden that creates an enormous barrier to entry into the EU market.

…would undergo an overwhelming administrative burden that creates an enormous barrier to entry into the EU market. In addition, the current wording of DAC8 creates a situation where cryptoasset operators would be required to collect unprecedented amounts of private information. • A threat to European privacy DCGG’s members are dedicated to safeguarding the privacy of their users and their data. Firstly, privacy in the EU is a fundamental right. The right to privacy is enshrined in the Universal Declaration of Human Rights (Article 12), the European Convention on Human Rights (Article 8), the EU Charter of Fundamental Rights (Articles 7 and 8), and the Treaty on the functioning of the European Union (Article 16) (collectively, the Fundamental Right to Privacy).

…and the Treaty on the functioning of the European Union (Article 16) (collectively, the Fundamental Right to Privacy). Therefore, any limitation on the exercise of fundamental rights must be provided for by law, respect the essence of those rights and freedoms, satisfy the principle of proportionality and may only be made if necessary (i.e., for tax purposes under DAC8) and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others. Competent tax authorities must be conscious of how distributed ledger technology differentiates crypto products from traditional finance. While all wallet transactions and keys are recorded on the Blockchain, these are not connected to personal user data.

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originalus šaltinis (PDF) ↗