EU votes to force verification of crypto transactions

EU votes to force verification of crypto transactions

EU votes to force verification of crypto transactions

Crypto regulation has taken a step forward in Europe, with the EU parliament voting to pass a draft that will require crypto users to submit sender and receiver information for all transfers.  

This includes unhosted, non-custodial wallets, and the move is part of a larger draft to “fight money laundering” , with an obligation for exchanges to notify Anti Money Laundering authorities of any transaction above 1000€.

Tide shift in Europe?

Just a couple of weeks ago the EU Parliament Committee on Economic and Monetary Affairs (ECON) saved crypto mining from becoming illegal, but yesterday’s vote suggests that the crypto community cannot take it for granted that the EU will take a similarly progressive stance on other issues.

The draft will still have to be brought to a parliament plenary session over the next few weeks, hence still allowing for amendments before it becomes an actual law. Further sessions may also bring out a higher percentage of elected voters.

Included in the draft are several points regarding non-custodial wallets, addressed as an alleged “tool to launder money”. This is in contrast with some analysis that suggests cash is still the favored funding choice for illicit activities, seeing as cash, unlike most cryptocurrencies, is not traceable.

Law enforcement is already using the blockchain’s transparent ledger to fight suspicious transactions, but the draft focuses on wallets that cannot be controlled by third party institutions, leaving the verification responsibility to exchanges like Kraken and Coinbase.

Paul Grewal, the Chief Legal Officer at Coinbase, has criticized the proposed bill in a post that suggests that “bad facts make bad law,” saying that EU policy only serves to slow down innovation and undermine crypto users’ personal security. Grewal also points out that the proposed measures for tracking crypto transactions are even stricter than those for fiat currency, suggesting that this may be designed to hand an advantage to old technology over the new.

More votes to come

As Romanian MEP Ramona Strugariu suggested during the discussion prior to the vote, the previous ECON proposal on crypto was heading in another direction:
"On crypto assets transactions and crypto service providers we actually have an agreement that was reached, was mentioned here and we have been voting for that, it was an ambitious approach, even more ambitious than the proposal in this report and we should coordinate there as well."

Crypto advocates will be hoping that better facts and more future-focused lawmakers will prevail in the next steps towards ratifying this bill.

This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.

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