These market rules are to eradicate the use of crypto for money laundering and terrorism financing by bringing in compliance requirements for crypto service providers. The European Union lawmakers agreed to regulate crypto covering the traceability of crypto assets that are traded in the market rules, in other to protect against market manipulation and also set a standard and conditions for assets like stablecoins.
The agreement on a new EU bill on Crypto transaction traceability was reached earlier this week after several discussions and negotiations were made with the European parliament and council. Other steps to passing a pan – EU law remains, including votes.
A co-rapporteur for the parliament’s economic and monetary affairs committee, said: The new regulation will strengthen the EU framework to curb money-laundering, reducing the risks of fraud and making crypto-asset transactions more protected.
The EU travel rule will ensure that CASPs (Crypto assets service providers) can prevent and detect sanctioned details and that transfers of crypto assets are fully traceable. This law will curb stealing and we hope other jurisdictions will follow this approach the co-legislators agreed on today.
The agreement reached applies to the travel rule, which also applies in traditional finance, to cover transfers in crypto-assets with info on the source and the asset, also its beneficiary travels as well as other transactions stored on both sides of the transfer EU lawmakers also decided there should be no minimum limit that is all crypto transaction that involves CASPs will need to comply with the travel rule no matter how much or how little cryptocurrency is being moved. This has toughened up the commission’s previous proposal, removing a €1000 limit for unknown transactions the EU’s executive had originally suggested. “CASPs Crypto-assets service providers will be obliged to provide this information to capable authorities if an investigation is conducted into money laundering and terrorist financing,” said the parliament in a press release.
“As Crypto-asset transactions existing thresholds that would be traceable requirements, parliament negotiators assured that there are no minimum thresholds nor exemptions for low-value transfers as earlier proposed. The beneficiary of Crypto assets providers will be to verify sources of assets and ensure there is no risk of money laundering or terrorism financing. Hence the law will bring a know-your-customer style compliance requirement for Crypto platforms waiting to do business in the EU. The incoming Crypto traceability rules will also cover crypto transactions from unhosted wallets managed by CASPs.
The negotiators agreed that in a case where a customer sends or receives more than €1000 worth of Crypto to or from their unhosted wallet, is effectively owned or controlled by this customer. The rules do not apply to person-to-person transfers conducted without a provider, such as bitcoin trading platforms, or among providers acting on their behalf, the parliament added.
EU has an existing legal framework to protect personal data which could raise questions about whether a new law mandating transfers of personal data of those carrying out Crypto transactions risks undermining other legal requirements on data processors operating in the region to adequately secure and protect peoples information but, per the parliament, the co-legislators factored in data protection considerations by agreeing that if there is no guarantee that privacy is upheld by the receiving end personal data such as data and address should not be disclosed.
Welcoming the provisional agreement, the commission said that the new traceability rules will enhance the monitoring and traceability of crypto-asset transfer and ensure compliance with the relevant measures called for in the Financial Action Task Force (FATF).