Startling clarity for self-custody: EU’s DAC8 brings withdrawals into tax reporting From January 1, 2026, Europe’s long-anticipated DAC8 rules came into effect, forcing crypto platforms that serve EU users to gather expanded customer and transaction data — and crucially, to capture withdrawals sent to self-custody and other unhosted wallets. What changed - The rules stem from Directive (EU) 2023/2226 and require crypto-asset service providers to collect KYC and transaction data on EU residents, including names, tax identification numbers (TINs) and full transaction histories. - Reporting covers crypto-to-fiat trades, crypto-to-crypto swaps and transfers — with “transfers” explicitly including withdrawals to addresses not managed by the same provider (i.e., self-custody/unhosted wallets). - Platforms must collect this data throughout 2026 and submit the first full-year reports in 2027; annual reporting is the norm. Timeline and enforcement - 2026 is framed as a systems-building and data-collection year. Cross-border matching and stronger enforcement are expected only after providers submit comparable reports across jurisdictions. - Providers can require users to provide a TIN. If users fail to comply, accounts may be blocked — but only after two reminders and a 60-day window, not via immediate freezes. Privacy debate and industry reaction - The launch has sparked heated discussion online and in the industry. Crypto commentator Blockchainchick’s breakdown on X amplified concerns that DAC8 effectively ends anonymous crypto transactions. - Regulators and some analysts push back: DAC8 standardizes reporting and increases tax visibility rather than outright banning self-custody. The measure focuses on structured data collection and cross-border matching rather than instant punitive action. Cost and revenue estimates - The European Commission estimates DAC8 could raise about €1.7 billion annually from crypto transactions; the European Parliament’s estimate ranges from €1 billion to €2.4 billion per year. - Implementation costs for providers are non-trivial: an estimated one-time setup cost of roughly €259 million and recurring annual costs in the range of €22.6 million to €24 million (per Commission impact assessments). What this means for users and providers - For users: moving funds from a regulated provider to a private wallet will now be visible in mandatory reports if the movement originates at a regulated platform. Self-custody is not banned, but withdrawals from exchanges are placed under reporting rules. - For providers: expect significant compliance and reporting overhead in 2026 as systems are built to capture standardized identity and account fields that enable cross-border matching. Bottom line DAC8 marks a major step in bringing crypto activity into established tax reporting frameworks across the EU. It increases transparency and gives tax authorities new tools, while leaving self-custody legal but more visible — a trade-off that will continue to drive debate over privacy, compliance costs and the future of on-chain anonymity. Read more AI-generated news on: undefined/news