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EU wants crypto assets transfers to be traced
In order to prevent money laundering, terrorist financing and other crimes, EU legislators have drafted a bill that aims to make crypto asset transfers traceable and identifiable.
Traceability & the "travel rule"
On June 30, Parliament and Council negotiators reached a provisional deal to regulate crypto asset transfers. The new rules are part of an anti-money laundering package: “The agreement extends the so-called “travel rule”, already existing in traditional finance, to cover transfers in crypto assets. This rule requires that information on the source of the asset and its beneficiary travels with the transaction and is stored on both sides of the transfer. Crypto-assets service providers (CASPs) will be obliged to provide this information to competent authorities if an investigation is conducted into money laundering and terrorist financing” (Press release EU Parliament, June 30).
The regulations will also apply for transfers from non-custodial wallets, such as hardware wallets to crypto-assets service providers (CASPs) like cryptocurrency exchanges and vice versa. In case of a transfer of more than 1000 euros, the owner of the wallet must be verified.
EU legislators highlight criminal use of crypto sector
The parliamentarians involved emphasized the potential of the bill to restrict illegal activities. In general, trading with cryptocurrencies and the crypto sector as a whole are described very critically and the downsides are highlighted.
For example, Ernest Urtasun, co-rapporteur for the Committee on Economic and Monetary Affairs (ECON) said: “This new regulation strengthens the European framework to fight money-laundering, reduces the risks of fraud and makes crypto-asset transactions more secure”.
The co-rapporteur for the Committee on Civil Liberties (LIBE), Assita Kanko became even more explicit: “For too long, crypto-assets have been under the radar of our law enforcement authorities. Terrorists used crypto for fundraising, to access to child pornography and criminals laundered their proceeds through it. This has really harmed people’s lives and raised doubts about the crypto sector. Today, we have taken a big step to address these problems. It will be much harder to misuse crypto-assets and innocent traders and investors will be better protected. The extended travel rule will make that world safer”.
What happens next?
The regulations have not yet entered into force. First, technical details must be finalized and then the European Parliament must also approve the draft before changes will be noticeable for EU citizens.
Ernest Urtasun expressed his satisfaction with the agreement reached: “This regulation introduces one of the most ambitious travel rules for transfers of crypto assets in the world. We hope other jurisdictions will follow the ambitious and rigorous approach the co-legislators agreed today”.
However, his statement also reveals a certain ambition: The European Union wants to lead the way in the field of crypto regulation and even claims to export its regulatory framework worldwide. However, it is not clear whether other countries will follow this example.
This article does not provide investment advice. Historical cryptocurrency data is not a guarantee of future market developments. The author may hold several of the cryptocurrencies mentioned in this article.
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