The industry has argued that the crypto regulation will limit innovation and infringe on privacy, so European politicians have voted to introduce new legislation to stem illicit flows.
According to the plan, crypto service providers must gather information on senders and beneficiaries in all crypto transactions and make it available to authorities upon request.
What information would be gathered?
The EU intends to expand existing laws requiring the confirmation of acquired data for transactions exceeding EUR 1,000 (US$1,107).
Crypto companies, including exchanges, would be required to gather, keep, and submit information on persons involved in transfers under a proposal first put up by the EU’s executive European Commission last year.
The rule eliminates the minimum barrier for cryptocurrency transactions and covers transfers between private crypto wallets (unhosted wallets).
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What does the law say?
According to Ernest Urtasun, a Spanish Green Party legislator who is helping to shepherd the bill through parliament, this would make it easier to identify and report suspicious transactions, freeze digital assets, and discourage high-risk transactions.
According to reports, global crypto markets were down about 2% by Friday AM Asia time, with Bitcoin down 3.2 percent.
The removal of the threshold, according to Urtasun, fits the proposed law with criteria established by the worldwide Financial Action Task Force, which establishes standards for preventing money laundering. As a result of these restrictions, crypto companies are required to gather and share transaction data.
The Commission had suggested applying the regulation to transfers of 1,000 euros ($1,116) or more, but this ‘de minimis’ restriction has been eliminated as part of the cross-party agreement, making all transfers subject to the rule.
A low-value transfer exception is not acceptable, as crypto users might circumvent the restrictions by establishing an almost infinite number of transactions, according to Urtasun, who also cited the modest amounts involved in some criminal transfers.
New requirements on crypto wallets owned by people rather than exchanges, as well as the formation of an EU list of high-risk or non-compliant crypto asset service providers, have also been agreed upon by the MPs’ committees.
Coinbase Chief Legal Officer Paul Grewal noted in a blog post on Monday that traditional cash, not cryptocurrency, was by far the most popular means of concealing the financial crime.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2022/04/02/new-crypto-legislation-european-union-to-keep-an-eye-on-crypto-transfers/