Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, and amending regulations. The EU market rules for crypto-assets
Crypto-assets are one of the main applications of distributed ledger technology. Crypto-assets are digital representations of value or of rights that have the potential to bring significant benefits to market participants, including retail holders of crypto-assets. Representations of value include external, non-intrinsic value attributed to a crypto-asset by the parties concerned or by market participants, meaning the value is subjective and based only on the interest of the purchaser of the crypto-asset.
The proposed legislation aims to ensure that a digital euro would have legal tender status, be easily accessible to all individuals, offer basic services for free, protect privacy and data, and prevent money laundering and terrorist financing risks.
The European Central Bank (ECB) welcomes the proposal and supports the protection of the legal tender status of euro cash. “The legislative proposal is key to ensuring that the digital euro brings value to the people, taking the appreciated features of cash into the digital sphere”, said Executive Board member Fabio Panetta
The European Commission has informed Google of its preliminary view that the company breached EU antitrust rules by distorting competition in the advertising technology industry (‘adtech’). Google, has been accused of abusing its dominant position in the adtech industry by favouring its own services over competitors, advertisers and publishers. According to the European Commission’s Statement of Objections, Google is dominant in the European Economic Area-wide markets for publisher ad servers with its service ‘DFP’ and for programmatic ad buying tools for the open web with its services ‘Google Ads’ and ‘DV360’. The Commission believes that Google has breached EU antitrust rules by distorting competition in the advertising technology industry.
As a conclusion in its investigation, the Commission has found that Google has abused its dominant positions by favouring its own ad exchange, AdX, in the ad selection auction run by its dominant publisher ad server, DFP. For example, Google is accused of informing AdX in advance of the value of the best bid from competitors which it had to beat to win the auction. Furthermore, Google Ads and DV360 were found to be placing bids on AdX, making it the most attractive ad exchange.
A behavioural remedy is likely to be ineffective to prevent the risk that Google continues such self-preferencing conducts or engages in new ones. The Commission’s preliminary view is therefore that only the mandatory divestment by Google of part of its services would address its competition concerns.
Emphasizing the importance of enforcing strict rules on digital asset advertising on social media and preventing influencers from misleading the public, the organization urged the Consumer Protection Cooperation Network to take action in this regard. BEUC also wants the European Commission to assess consumer protection on social media and promote cooperation between consumer groups and the European Supervisory Authorities to protect consumers from misleading promotions of digital assets.
Additionally, BEUC stated that neither the EU’s Markets in Crypto-Assets (MiCA) nor the Digital Services Act (DSA) offers sufficient consumer protection. The complaint was filed with the support of consumer groups in several European countries.
DAC8 serves a different purpose than MiCA. MiCA regulates and authorizes cryptocurrency service providers established in the EU. However, some operators are not covered by it, and MiCA does not enable tax authorities to collect and exchange the necessary information for taxing cryptocurrency income. DAC8 applies to all cryptocurrency service providers and operators with users in the EU. It covers businesses that provide services to EU residents, regardless of their location, and requires reporting of information for both regulated and unregulated cryptocurrency service providers and operators. As mentioned in the statement: ‘DAC8 is also consistent with the recently approved OECD Crypto-Asset Reporting Framework (CARF), as well as the amendments to its Common Reporting Standard. These standards have also been endorsed by the G20. This initiative aims at introducing greater tax transparency on crypto-assets’.’
The need for this regulation arises because effective taxation is important for public investment, services and business innovation. However, tax authorities are unable to monitor cryptocurrency profits for taxation purposes, resulting in a loss of revenue.
The Directive aims to improve UE’s ability to detect and counter tax fraud through more reporting obligations and automatic exchange of information on advance cross-border rulings used by individuals. The updated Directive also includes financial institutions’ reporting obligations regarding e-money and the central bank digital currencies (CBDC)
The new reporting rules for cryptocurrencies, e-money, and central bank digital currencies will be enforced from 1 January 2026, after the consultative opinion of the European Parliament.
According to the report from the Bloomberg, the European Commission will take action regarding the concerns that Microsoft may be using its dominant market position to stifle competition and innovation. The investigation will focus on whether Microsoft is using its control of Azure cloud service to favor its own products and services over those of its competitors, as well as whether it is hindering customers from accessing and using alternative cloud providers. The antitrust probe will also examine Microsoft’s data policies and whether they comply with EU regulations.
Microsoft has responded to the investigation by stating that it is committed to complying with all applicable laws and regulations and that it will cooperate fully with the European Commission. The company has also emphasized its commitment to competition and innovation, stating that it believes that its cloud services are providing customers with a range of choices and opportunities to enhance their businesses.
The investigation marks the latest in a series of antitrust probes by the EU into technology giants, including Google and Amazon. The EU’s actions reflect growing concern over the power of big technology companies and its impact on competition and innovation in the digital economy.
In a policy statement, the European Commission stated that with an estimated cost of 45 million Euros, a 1,100 km cable will be installed via international Black Sea waters to connect European Union (EU) member states to the Caucasus. The need for the cable was identified jointly by the EU and Georgia in 2021 to enhance Georgia’s digital connectivity. Recent events such as the war in Ukraine and concerns over infrastructure vulnerabilities have provided further impetus for the project.
Moreover, land-based and undersea internet cables have become a topic of scrutiny due to fears of espionage and intentional sabotage. For that, the EU’s initiative seeks to ensure secure and stable connections, while reducing the risk associated with reliance on insecure infrastructure.
In 2019, the Spotify filed a complaint with the European Commission against Apple. The complaint was about rules and fees developers must pay Apple when in-app payments or subscriptions are involved. Spotify has to pay the Apple a percentage of any subscriptions secured through Apple’s App Store, which effectively makes a Spotify subscription more expensive. In particular when the consumer signs up through an iPhone or iPad than through the Spotify’s website. This additional premium was nicknamed ‘Apple Store Tax’.
It is worth mentioning that Apple faced legal challenges in other parts of the world regarding its enforcement policy of in-app purchases. In the Netherlands, company was fined a significant amount after failing to adhere to an order to permit dating apps to use alternative payment systems. However, this issue was later resolved when Apple made concessions and allowed for alternatives. India’s competition regulator also imposed similar scrutiny on Apple’s IAP.
In a recent update, the EU antitrust regulator is seeking more information on Apple’s mobile payment system, specifically regarding accusations of restricting rivals’access to its Near-Field Communication technology. This request for information comes three months after Apple defended itself at a hearing. Even when the EC reaches a final decision, there will likely be a lengthy appeals process where Apple will fight its corner. The Commission can impose a fine of up to 10% of Apple’s global turnover. Depending on how the case unfolds, Apple may even have to remove contractual obligations with developers, allowing companies like Spotify to link from their iPhone apps to subscription portals elsewhere.
The European Commission is set to introduce a legislative initiative to make content-heavy platforms contribute to the cost of telecom networks before the end of the year. Broad coalition of stakeholders has come together to publicly warn against introducing network fees
Earlier in February, the European Commission launched a consultation on the Connectivity Package. It includes a consultation on the idea of a ‘fair share’, which would require large traffic generators to pay a contribution. This has prompted concerns from several sectors and interest groups due to the potential violation of the net neutrality principle, as it could be based on putting specific conditions on certain large traffic generators.
The EU’s effort in area, comes after large telecom operators pointing out how they are continuously asked to invest in upgrading their networks’ capacity whilst a handful of tech companies reap most of the economic benefits. The EU’s copyright rules are somewhat of a blueprint for the senders-pay initiative, as they set a precedent in trying to redistribute revenues generated in the digital economy with regulatory intervention.
This statement is signed by NGOs, rightsholders, broadband service providers, cloud associations, and Wikimedia. The signatories consider the harm to consumers would come from the fact that the network contribution would be passed on to them, whilst their choice will be reduced as content companies will have less money to invest and distribute new content.
As noted in their statement: ‘this is an unprecedented alliance of stakeholders all united against one principle: introducing a mandatory network fee, or “fair share” contribution’
The Connectivity Package report included a preliminary assessment of the impact of the proposal for direct payments to content providers to certain telecom operators. The report concluded that the proposed model would have a negative impact on the functioning of the Internet economy, and that the proposed model would be likely to distort competition in the telecom market.
