Parliament and Council negotiators reached a provisional agreement on Wednesday on a new law aimed at ensuring the traceability of cryptocurrency transfers and blocking any suspicious transactions.
Traceability from the transfer of the first euro
The agreement aims to extend the scope of “rules of travel” – which already exist in traditional finance – to crypto asset transfers. The rule states that information about the source of the funds and its beneficiaries must “travel” with the transaction and be stored on both sides of the transfer. Crypto-asset service providers will be obliged to submit this information to the competent authorities in the event of an investigation into money laundering and terrorist financing.
As crypto-asset transactions can easily bypass existing thresholds that would trigger traceability requirements, Parliament’s negotiators have ensured that there are no minimum thresholds or exceptions for the transfer of funds, a small amount, as originally proposed.
Regarding the protection of personal data, especially the names and addresses required by the “travel rule”, the negotiators considered that if there is no guarantee of protection of personal data at the end of the chain, such information should not be sent.
The fight against money laundering and terrorist financing
Before making crypto-assets available to users, providers should verify that the source of the asset is not subject to restrictive measures or sanctions and that there is no risk of money laundering, money laundering or terrorist financing.
Negotiators agreed to establish a public registry for crypto-asset service providers that do not meet established standards or are not supervised, with which EU providers should not trade. This registry will be covered by the Crypto Asset Markets Regulation, which is currently being negotiated.
Wallets that are not hosted
The rules will also cover non-hosted wallet transactions (a crypto-asset wallet address maintained by a private user) when interacting with wallets managed by crypto-asset service providers.
If a client sends or receives more than 1,000 euros to or from their non-hosted wallet, the service provider must verify that the non-hosted wallet is actually owned or controlled by this client.
The rules do not apply to transfers of crypto assets between individuals that take place without the intervention of service providers, such as bitcoin exchanges, or between service providers acting on their own initiative.
Quotes
Ernest Urtasun (Greens/EFA, ES), co-rapporteur of the Committee on Economic and Monetary Affairs, said: “This new regulation strengthens the European anti-money laundering framework, reduces the risk of fraud and makes crypto-asset transactions safer. “Travel Rule “The EU will not only ensure that crypto-asset service providers can prevent and detect sanctioned addresses, but also that the means of crypto-asset transfers are fully traceable. In addition, it is introducing one of the world’s most ambitious “travel rules” for crypto-transfers. assets. We hope that other jurisdictions will follow the ambitious and rigorous approach that co-legislators have agreed upon. It was approved today.”
Assita Kanko (ECR, BE), co-rapporteur of the Committee on Civil Liberties, Justice and Home Affairs, added: “For too long, crypto-assets have been under the radar of our law enforcement authorities. Terrorists have used cryptocurrencies to raise funds, child pornography and criminals have have used to hide their activities. This has really taken a toll on many people’s lives and caused concern for the industry. Today we have taken an important step to address these issues. It will be much harder to abuse crypto-assets and innocent traders and investors will be better protected. Expanding the ‘rules of travel’ will make the world safer.”
Next steps
The Parliament, the Council and the Commission are now working on the technical aspects of the text. Before entering into force, the agreement will have to be approved by the economic affairs and civil liberties committees, and then by the parliament as a whole.
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