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Compensation fund for EU victims of crypto fraud canceled

Photo of: Joseph Stone
by Joseph Stone

A petition called for the creation of a fund to compensate victims of crimes associated with cryptocurrency. The European Parliament rejected this request, which was based on a taxation of blockchain nodes in Europe.

The introduction of a “virtually imperceptible” tax on cryptocurrency blockchain nodes in Europe will not come into force. The British lawyer Jonathan Levy proposed a tax of 0.0001 cents per euro.

This money was not intended to feed the European budget, but to allow the creation of a compensation fund. In a petition to the EU Parliament, Levy advocated the creation of such a fund to compensate victims of crimes related to cryptocurrency.

“I think anyone, regardless of nationality, doing business with a crypto-active that affects the EU in some way should be covered,” the lawyer defended. His arguments did not convince the parliamentarians to approve a European tax project, however.

For the Commission, various protections already exist to protect victims, particularly in terms of theft and fraud. It highlights the recent adoption of the digital finance package. This package introduces new obligations in the field of crypto-actives.

“This new proposal will complement the 5th anti-money laundering directive already implemented by helping to solve these problems,” the Commission said. And this will result in more protection for European citizens.

The Commission does not have the authority to set up a compensation fund. Thus, “imposing transparency requirements on issuers of crypto-actives will help reduce the risk of fraud. And the operational requirements imposed on the main providers of crypto-actives services are essential to limit the number of hackers,” the Commission added.

It therefore calls on investors and consumers to turn to national authorities. They are best placed to adopt solutions to protect victims involving crypto-actives.

Finally, the Commission concludes by recalling that it “is not competent to set up a compensation fund for victims of financial crime”. According to CipherTrace, this crime represents an estimated $1.4 billion in damages worldwide for the first 5 months of 2020.