EU’s New DAC8 Regulations on Crypto Taxation: Impact on Self-Custody Withdrawals

As of January 1, 2026, the new DAC8 regulations require cryptocurrency platforms serving users in the European Union to gather Know Your Customer (KYC) and transaction data for trades and withdrawals, including those made to self-custody wallets. This change has sparked discussions around privacy concerns for users of digital assets.

Key Takeaways

Starting January 1, 2026, DAC8 regulations will affect cryptocurrency platforms in the EU.
Platforms must collect user information, including KYC data, and report it to tax authorities.
All crypto transactions, including those involving self-custody wallets, are subject to these new rules.
The European Commission predicts significant revenue increases from crypto taxation due to DAC8.
Failing to provide Tax Identification Numbers may lead to temporary account restrictions.

EU DAC8 crypto tax rules extend reporting to self-custody wallets.

Overview of New Wallet Regulations

The recently established regulations, which are part of Directive (EU) 2023/2226, mandate that exchanges and service providers report user information to national tax authorities. This includes names, tax identification numbers, and transaction histories, following guidelines from the European Commission.

A cryptocurrency commentator known as Blockchainchick shared insights into the DAC8 regulation on the social platform X, igniting debate among industry professionals. Some critics argue that these regulations signal the end of anonymous cryptocurrency transactions. However, analysts contend that the regulations focus more on structured reporting rather than immediate enforcement actions.

Under these rules, digital asset service providers are required to collect customer data throughout 2026 and submit their first complete annual reports by 2027. The 2026 period will primarily focus on system development and data gathering, with a larger emphasis on enforcement expected later once reports can be collaboratively assessed across different jurisdictions.

The regulations affect all residents of the EU and cover a range of transactions, such as crypto-to-fiat trades, crypto-to-crypto exchanges, and transfers. Notably, the term "transfers" includes withdrawals to addresses not associated with the same provider, meaning that activities involving self-custody wallets and unhosted destinations are also included in the reporting requirements, according to research from the European Parliament.

In cases where users fail to provide their Tax Identification Number, platforms may have to temporarily freeze accounts or restrict transactions. However, account blocking will occur only after users receive two reminders and are given a 60-day period to comply, rather than being an instant action as per the directive.

The European Commission anticipates that DAC8 could lead to an additional €1.7 billion in annual revenue from crypto transactions, while estimates from the European Parliament project a broader range of €1 billion to €2.4 billion yearly. Providers may incur approximately €259 million in initial setup costs and ongoing annual expenses ranging from €22.6 million to €24 million, based on the impact assessments conducted by the Commission.

In its impact assessment, the European Commission outlines a balanced approach that allows for the aggregation of data in certain parts of the report while utilizing standardized identity and account fields for effective cross-border matching. The goal of this framework is to enhance tax visibility without outright banning self-custody practices, as stated in the directive's text.

Reporting will occur on an annual basis, targeting crypto-asset service providers and their users residing in the EU. Withdrawals to self-custody wallets that originate from regulated providers now fall under the jurisdiction of these new regulatory reporting requirements.