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European Union Looks to Strengthen Crypto Regulation to Make Transactions More Traceable | CoinCodex

coincodex.com 21 July 2021 12:39, UTC
Reading time: ~3 m

Key highlights:

  • The European Commission has presented a package of legislative proposal to improve the EU's AML/CFT regulations
  • In one of the proposals, the European Commission plans to have EU law reflect the FATF's "crypto travel rule"
  • The travel rule requires cryptocurrency businesses facilitating crypto transactions to collect and share personal information about the sender and recipient

European Commission wants EU law to reflect FATF's "crypto travel rule"

The European Union is strengthening its crypto regulation push, with the European Commission publicly sharing a proposal for reflecting the Financial Action Task Force’s “travel rule” in EU law. 

The travel rule requires cryptocurrency businesses such as exchanges to share information about the originator and beneficiary of cryptocurrency transactions. For transactions that fall within the regulation, a crypto-asset service provider (CASP) must accompany the transaction with information about the originator’s name, account number, address, personal document number and date and place of birth. 

The European Commission proposes that the existing Regulation(EU) 2015/847 should be complemented to also include crypto assets within the scope of the types of fund transfers covered by the rule.

“Given that virtual assets transfers are subject to similar money laundering and terrorist financing risks as wire funds transfers, it is to requirements of the same nature they must also be submitted and it therefore appears logical to use the same legislative instrument to address these common issues.”

The proposal is part of a wider package of legislative proposals to bolster the European Union’s regulations for preventing money laundering and terrorist financing, which the European Commission presented yesterday.

The European Commission noted that not all CASPs, are currently regulated under the European Union’s AML/CFT regulations. Under the new proposals, these rules would be extended to the entire cryptocurrency sector and not just the categories that are covered at the moment. According to the European Commission, the proposed rules would ensure that cryptocurrency transfers are fully traceable:

“Today's amendments will ensure full traceability of crypto-asset transfers, such as Bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing.”

As part of a package of legislative proposals, the European Commission also called for a ban on anonymous cryptocurrency wallets. The proposals don’t just cover cryptocurrencies, but also other measures for preventing money laundering, for example by establishing a new EU Authority focused on anti-money laundering and limiting cash payments to a maximum of €10,000.

In order to become part of EU law, the package of proposals has to be discussed and approved by the European Parliament and Council. 

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