Lawmaker proposals to blacklist non-compliant firms are getting a rough ride as landmark MiCA legislation reaches its final stages.
A proposed European Union ban on crypto providers offering services from tax and money laundering havens raises “serious doubts” and could breach global trade rules, according to a European Commission document seen by CoinDesk.
Lawmakers from the European Parliament have said that crypto-asset providers shouldn’t be authorized to offer services in the bloc if they’re from shady jurisdictions like Panama, but Commission officials, mediating late-stage talks on the law known as the Markets in Crypto Assets Regulation (MiCA), don’t agree.
“No such prohibition exists in other sectoral legislation,” and it’s not clear why they should apply only to crypto, said the paper, produced to influence talks taking place between governments and lawmakers that are seeking to hash out a final version of the MiCA law.
“Such a prohibition … might create barriers to the provision of services in the EU and therefore might be seen as constituting a breach of international commitments taken” at the World Trade Organization, it added.
Officials “have serious doubts about the feasibility and proportionality” of a blacklist of non-compliant crypto asset service providers, which lawmakers wanted to see maintained by the EU securities-market watchdog ESMA.
The Commission paper said the criteria for the list were unclear, and that any such initiative would be better left to a wider redraft of anti-money laundering (AML) laws that covers sectors such as banking and the legal profession.
“We would urge the [European Parliament] to reconsider and if still deemed necessary await discussions on the AML Regulation,” the paper said.
The Commission document is badged as a “non-paper,” meaning it does not represent a formal view of the institution. The Parliament voted on its favored version of the draft law back in March, narrowly avoiding restrictions on energy-intensive proof-of-work technology that some characterized as a bitcoin (BTC) ban.
The EU blacklists jurisdictions that it views as encouraging tax avoidance or having sloppy money-laundering controls. The latest version of the list includes territories such as the U.S. Virgin Islands, Cayman Islands, and Panama.