Lawmakers in the European Union have pushed forward stricter rules requiring crypto transfers to be traceable, just like electronic money transfers.
The new proposed rules require crypto service providers to keep identity records about the sender and recipient of crypto transfers and make the records available to “competent authorities”.
They are part of an EU anti-money laundering (AML) and counter-terrorism financing (CFT) package in response to a European Commission (EC) proposal on AML/CTF that was launched last July. was outlined. The EC wanted to ban anonymous crypto wallets.
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MPs want the European Banking Authority (EBA) to create a public register of crypto providers at high risk of violating AML/CTF rules, alongside a “non-exhaustive list of non-compliant providers”.
“Before making the crypto assets available to beneficiaries, providers should verify that the source of the assets is not subject to restrictive measures and that there are no risks of money laundering or terrorist financing,” they announced.
MEPs from the Committee on Economic and Monetary Affairs (ECON) and the Committee on Civil Liberties (LIBE) voted on the text of the legislation on Thursday, with 93 votes in favour, 14 against and 14 abstentions. It will be put to the vote at the European Parliament’s plenary session in April.
“Illegal flows in crypto assets go largely unnoticed through Europe and the world, making them an ideal tool to ensure anonymity,” said Ernest Urtasun, vice char of the Greens/European Free Alliance in Spain and co-rapporteur for ECON . a statement.
Urtusan noted significant changes made to the EC proposal, including the removal of a €1,000 minimum for checking wire transfers because criminals conduct crypto transactions differently.
“Criminals use small money transfers to cover up large operations (smurfs). Multiple small transfers can be done automatically using multiple dispersed addresses. Criminal activities like fraud, scams, hacks, terrorist financing can be done with small amounts.” he explained on Twitter†
The public registry is intended to help providers identify non-compliant entities, risky providers of crypto asset services, services such as crypto mixers and toggle switches, and crypto asset wallets with links to criminal activity.
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On privacy protection, Urtusan notes: “No information will be included in the transfer itself or passed on to the counterparty if there is a risk that such counterparty cannot protect the confidentiality of the data. We clarify the period and conditions for data retention. “
Also, transfers to and from non-hosted wallets will be subject to traceability rules and reporting, and identity details to be verified.
Earlier this week, Coinbase’s chief legal officer, Paul Grewal, said law enforcement officers can already track and trace digital asset transfers with advanced analytics tools and said none of this requires disrupting the established privacy expectations of wallet holders.
Coinbase described it as a ‘critical EU vote’ and Grewal warned: “If passed, this revision would unleash a full surveillance regime on exchanges like Coinbase, stifle innovation and undermine the self-hosted wallets individuals use to store their digital assets. safe to protect.”