DAC8: Automatic Exchange of Information on Crypto-Assets

Introduction

The 8^thamendment to the EU Directive on Administrative Cooperation – DAC8 for short – was adopted on October 17, 2023. It introduces transaction reporting obligations for crypto-asset service providers (CASPs) and crypto-asset operators with a EU connection. Member states are obliged to transpose the directive into national law by December 31, 2025, at the latest. The regulations must then be applied from January 1^st, 2026. The extraterritorial scope of application of the DAC8 and the dovetailing with the MiCAR (Markets in Crypto-assets Regulation) and the CARF (OECD Crypto-Asset Reporting Framework) are also relevant for Swiss companies active in the crypto industry. This article presents the core elements of the DAC8.

Who is obliged by DAC8?

CASPs fall within the scope of the directive if they provide one or more MiCAR crypto-asset services that constitute an exchange transaction – this also includes staking and lending. Crypto-asset operators based outside the EU but offering crypto-asset services to third parties on a commercial basis within the EU also fall within the scope of application. The crypto-asset operator must register in a member state in order to fulfil its reporting obligation.

Which crypto-assets must be reported?

The directive defines the term crypto-asset in accordance with MiCAR as a digital representation of a value or right that can be transferred and stored electronically using distributed ledger technology or similar technology. Crypto-assets that do not qualify as central bank digital currencies (CBDCs), e-money and crypto-assets for which the CASP has adequately determined that it cannot be used for payment or investment purposes must be reported. Conversely, this means that stablecoins such as e-money tokens (EMTs) and asset-referenced tokens (ARTs), payment tokens, security tokens and certain non-fungible tokens (NFTs) are reportable crypto-assets.

Which crypto-asset transactions must be reported?

A reportable transaction means, on the one hand, an exchange transaction, which is defined as an exchange between reportable cryptocurrencies and fiat currencies and as an exchange between one or more reportable crypto-assets. On the other hand, any transfer of reportable crypto-assets is covered by the scope of application. This means a transaction that moves a reportable crypto-asset from or to the crypto-asset address or account of a crypto-asset user, with the exception of a transaction that is managed by the reporting CASP on behalf of the same crypto-asset user, if the reporting CASP cannot determine that the transaction is an exchange based on the knowledge available to the reporting CASP at the time of the transaction.

Which users of crypto-assets are subject to reporting requirements?

Reportable users are referred to as crypto-asset users. This is an individual or entity resident in a member state who is a customer of a reporting CASP. Persons exempt from the reporting obligation are a) stock-listed entities, b) entities of a group of stock-listed entities, c) governmental bodies, d) international organisations, e) central banks and f) financial institutions that are not investment undertakings.

What are the reporting obligations?

CASPs are obliged to identify and report crypto-asset users. For this purpose, the reporting CASP receives a self-disclosure from the crypto-asset user, which enables them to determine their tax residency. The requirements for the admissibility of self-disclosures are set out in the directive. Furthermore, a reporting CASP must submit the required information to the competent authority of the member state in which it applies for authorisation, is resident for tax purposes or is registered, no later than January 31, of the year following the relevant calendar year or other appropriate reporting period of the reportable transaction. Finally, the member states are obliged to include the tax identification number of the reported individual or entity issued by the member state of residence in the transmission of the transaction.

Conclusion and outlook

The DAC8 is criticised for various reasons. On the one hand, it is noted that the due diligence obligations to be fulfilled are based on the self-disclosure of crypto-asset users and that there is therefore a risk that the reporting CASP will transmit incorrect information to the competent tax authorities. Secondly, the inclusion of staking and lending in the scope of DAC8 is criticised, as this represents a deviation from CARF and MiCAR, which could lead to an incoherent expansion of the scope and a potential disadvantage for the EU internal market. Finally, the DAC8, like the CARF, does not contain a de minimis rule. This could be particularly disadvantageous for SMEs, for which the fulfilment of compliance obligations is more demanding than for multinational companies. This harbours the risk of making it more difficult for start-ups to innovate new blockchain-based financial products.

With regard to the interaction between DAC8 and CARF, the EU legislator stipulates that the latter should serve as an interpretative aid for the directive in order to ensure uniform application in all member states. Since Switzerland has committed to implementing CARF by January 1^st, 2026, and DAC8 is also applicable to crypto-asset operators based outside the EU, Swiss SMEs in particular should use the next two years to design their internal processes in such a way that legally secure compliance is guaranteed by the deadline.

We at Pontinova Law will be happy to advise and support you and your company.