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The EU on Thursday legislates more strict traceability rules for cryptocurrencies transfer, in a move the crypto industry said would affect privacy, hinder innovation and expose customers to a higher risk of theft.
The draft of the legislation, a part of the broader fight against money laundering, terrorist financing, and financial crimes, mandates cryptocurrency exchanges or platforms to gather and share data on crypto transactions in a business that has so far thrived on its anonymity.
The €1.9 trillion cryptocurrency industry is still subject to Anti-Money Laundering (AML) regulations across the globe. However, the concern that bitcoins and their peers could impact financial stability and be used by criminals is becoming the driving force for lawmakers to bring new regulations for the sector to heel. Under the proposal, which was legislated last year by the European Commission, crypto exchanges and platforms would have to gather, hold and submit information regarding cryptocurrency transactions. The information is also needed to be provided to the regulatory bodies.
EU lawmakers back tough traceability rules on crypto transfers in fight against money laundering https://t.co/spsifrgU8w
— NewsAsia (@newsasia360) March 31, 2022
Ernest Urtasun, a Spanish Green Party lawmaker helping to steer the measure through the parliament said, this would make it easier to identify illicit activities and report suspicious transactions, freeze cryptocurrencies as well as restrict high-risk digital transactions. In this regard, Cryptocurrency exchange Coinbase had warned ahead of the vote that the traceability rules would usher in a surveillance regime that stifles innovation.
This legislation would also crackdown on “unhosted” digital wallets held by individuals, not exchanges – by requiring them to keep records of the cryptocurrency transactions and notify regulatory authorities instantly if the transaction is worth €1,000 or more
Suggested Read: Bank of England Introduces New Regulatory Approach for Crypto