On Wednesday, negotiators from the Parliament and the Council reached a tentative agreement on new legislation aimed at ensuring the traceability of cryptocurrency transfers and the blocking of any suspicious transactions.
Traceability from the transfer of the first euro
The agreement aims to extend the scope of application of the “travel rule” – already existing in traditional finance – to crypto-asset transfers. The rule states that information about the source of the asset and its beneficiaries must “travel” with the transaction and be stored on both sides of the transfer. Cryptocurrency service providers will be required to provide this information to the relevant 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 negotiators have ensured that there are no minimum thresholds or exceptions for asset transfers of a small amount, as initially proposed.
Concerning the protection of personal data, in particular the name and address 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.
Fight against money laundering and terrorist financing
Before making crypto-assets available to beneficiaries, 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 or terrorist financing.
The negotiators agreed to establish a public registry for cryptocurrency service providers that do not meet established standards or are not supervised and with which EU providers would not be allowed to trade. This registry will be covered by the cryptocurrency markets regulation, which is currently under negotiation.
The rules will also address non-hosted wallet transactions (a crypto-asset wallet address managed 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 whether the non-hosted wallet is actually owned or controlled by this client.
The rules do not apply to crypto-asset transfers between individuals made without the intervention of a service provider, such as bitcoin exchanges, or between service providers acting on their own initiative.
Ernesto Urtasun (Verts/ALE, ES), co-rapporteur pour la commission des affaires économiques et monétaires, a déclaré: “Ce nouveau règlement renforce le cadre européen de la lutte contre le blanchiment d’argent, réduit les risques de fraude et rend les transactions de crypto-actifs plus sûres.La ‘règle du voyage’ de l’UE will guarantee not only that the les totally traçables. Par ailleurs, il introduit une ‘règle du voyage’ pour les transferts de crypto-actifs parmi les plus ambitées au monde. Nous espérons que les autres juridictions suivront l’approche ambiteuse et rigoureuse sur laquelle les co-legislateurs se sont accordés 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 they have used cryptocurrencies to raise funds, child pornography and criminals have used them to hide their activities. This has really taken a toll on the lives of many people and raised concerns for the industry. Today we took an important step to address these problems. It will be much more difficult to misuse cryptocurrencies and innocent traders and investors will be better protected. The extension of the “travel rule” will make the world safer.”
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 whole Parliament.