The European Commission is turning up the heat on digital asset regulation. In a significant move to close tax loopholes, the Commission has officially issued formal notices to 12 member states for failing to fully integrate the EU’s latest crypto tax reporting rules into their local systems.
The countries in the spotlight include Belgium, Bulgaria, Czechia, Estonia, Greece, Spain, Cyprus, Luxembourg, Malta, the Netherlands, Poland, and Portugal. These nations now have a tight two-month window to respond and prove they are aligning with the Union’s transparency standards. If they fail to act, the Commission warned it could escalate the matter to a “reasoned opinion,” a formal step that often precedes legal action in the European Court of Justice.
Closing the Loophole: Why the EU is Demanding Data
At the heart of this crackdown is the need for better data. The EU’s updated tax directive is designed to combat tax fraud, evasion, and avoidance by requiring Crypto Asset Service Providers (CASPs) to report specific user and transaction data to authorities. By tracking these movements, the EU aims to bring the digital asset market out of the “Wild West” and into a regulated financial environment similar to traditional banking.
This move aligns the European Union with the OECD’s Crypto-Asset Reporting Framework, ensuring that Europe isn’t just a walled garden but part of a global effort to track digital wealth. For investors, this means the era of “invisible” crypto gains is rapidly coming to an end as member states are forced to implement these tracking mechanisms.
Hungary Singled Out Over MiCA Compliance Issues
While 12 countries are being nudged regarding tax rules, Hungary is facing a more specific legal challenge. The Commission has flagged Hungary for potentially violating the Markets in Crypto-Assets (MiCA) framework following a controversial amendment to its local laws regarding “exchange validation services.”
The Commission noted that while Hungary’s intent to strengthen Anti-Money Laundering (AML) safeguards is valid, the way they’ve gone about it has forced some crypto providers to suspend or stop their services entirely. The EU was blunt: national laws must remain compatible with MiCA. This serves as a reminder that while member states can add their own flavors of regulation, they cannot override the overarching EU framework that was designed to create a “single market” for crypto.
The MiCA rollout is currently in its final stages. Most companies that were operating before late 2024 have until July 1, 2026, to become fully compliant or exit the European market. As the deadline nears, the Commission’s recent actions signal that they won’t be hand-holding laggards through the transition.
