DAC8, the Directive on Administrative Cooperation, broadens the EU’s tax reporting to crypto assets. Effective January 1, 2026, DAC8 requires crypto-asset service providers to gather and disclose extensive data on user transactions to national tax authorities, with the information shared across EU member states to boost transparency. The regulation aims to treat cryptocurrencies similarly to traditional financial assets and deter tax evasion in a historically unregulated space.
DAC8 imposes compliance costs that are likely to be disproportionately burdensome for smaller startups, potentially undermining their ability to compete, since many lack resources to build the required identity verification, data collection, and secure reporting systems now mandated under DAC8. Larger firms can spread these costs over a broader customer base, potentially leaving startups at a disadvantage unless they innovate or partner with larger providers, which could risk stifling innovation.
DAC8 relates to MiCA by operating in conjunction with the regulation, which focuses on licensing and operational standards while DAC8 ensures tax compliance through precise reporting of user data and transactions. The penalties for non-compliance are severe, including hefty fines and sanctions under national laws, and tax authorities may freeze or seize crypto assets tied to unpaid taxes regardless of location. Startups can mitigate costs by adopting Compliance-as-a-Service solutions, using industry-standard APIs for data collection and reporting, focusing on niche markets that fall outside full DAC8 scope, and collaborating with larger firms to access shared compliance infrastructure.
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