According to the EU new legislation that was agreed upon on Wednesday, transfers of cryptocurrencies would be monitored and tracked in order to combat money laundering, financing of terrorist organizations, and other offenses. The negotiators from Parliament and the Council have come to a tentative agreement on a new draft that aims to guarantee that cryptocurrency transactions can always be monitored and those questionable transactions can be stopped.
According to Ernest Urtasun, co-rapporteur for ECON, “this new regulation strengthens the European framework to fight money-laundering, reduces the risks of fraud, and makes crypto-asset transactions more secure.
Traceability Will Begin From The Initial Funds Transferred
Established in traditional finance, the deal expands the famous “travel rule” to encompass transfers of cryptocurrencies. This regulation stipulates that information regarding the asset’s source and recipient must travel with the transfer and be retained on both ends. If an inquiry is undertaken into money laundering and terrorism, crypto-assets service providers (CASPs) will be required to give these details to the appropriate authorities.
Due to the ease with which cryptocurrency transactions might avoid existing criteria that would activate tracking criteria, negotiators for the European Parliament have ensured there will be no baseline limits or waivers for low-value transactions, as was previously suggested. Concerning the protection of personal information, including the names and addresses mandated by the travel rule, participants agreed that such information should not be transmitted if there is no assurance that the receiving party will respect confidentiality.
Combating Terrorism Financing And Money Laundering Activities
Before making crypto-assets accessible to recipients, providers will have to authenticate that the asset’s origin is not subject to restrictive measures or restrictions or that there are no risks of laundering money or funding for terrorism. Only after this verification will crypto-assets be made available to recipients.
The Markets in Crypto-assets rules (MiCA) are currently being negotiated. Besides, the negotiators came to an agreement that the establishment of a public register for CASPs that do not comply with regulations and are not carefully monitored, with which EU CASPs would not be permitted to trade, will be covered by the rules.
Monitoring Un-Hosted Wallets For User Protection
The restrictions would also apply to interactions between so-called un-hosted wallets (a crypto-asset wallet address held by a private user) and hosted wallets maintained by CASPs. If a consumer sends or receives more than one thousand euros to or from their own un-hosted wallet, the CASP must verify that the wallet is legally owned and controlled by the user.
The rules no longer apply to person-to-person transactions done without a provider, such as on platforms for trading cryptocurrencies or between providers operating on their own behalf. In addition, this policy provides one of the most stringent travel regulations for crypto-asset transactions in the world. Authorities expect that additional jurisdictions will adopt the ambitious and stringent strategy agreed upon by legislators today. In addition, the EU travel rule will guarantee that CASPs are able to block and detect sanctioned accounts and that all crypto-asset transactions are fully monitored.
Too long have crypto-assets been under the watchful eye of law enforcement agencies. Terrorists utilized cryptocurrency for fundraising, to gain access to child pornography, and for money laundering. This has significantly impacted people’s lives and cast suspicion on the crypto industry. Today, authorities have taken significant action to solve these issues. It will be considerably more difficult to misappropriate crypto-assets, and innocent traders and shareholders will be fully protected. The expanded travel rule will increase global safety.