EU: Parliament Agrees on Crypto Transaction Rules

With the rising popularity of decentralized currencies, concerns related to illegal crypto transfers and money laundering are also swelling especially in the EU. Some countries are planning to launch their CBDCs while in a recent advancement, Parliament and Council negotiators have extended the ‘travel rule’ to track crypto transactions effectively. Travel rule is a set of rules used to regulate traditional finance which is also being used in the case of crypto but regarded as less effective.

As reported by the European Parliament website, the new set of rules will ensure strict surveillance of every crypto transaction including Bitcoin, Altcoins, and stable coins. This legislation is a part and parcel of the new anti-money laundering package by the EU and will also align itself with the markets in MiCA.

Newly Proposed Rules by EU

Crypto transactions circumvent subsisting thresholds which is why more productive rules were required hence Parliament negotiators have made sure that there are no minimum thresholds and rules will be equally applied to small transactions as well.

The negotiators also agreed that if there is a chance of a data breach at the receiver’s end, personal data should not be sent. Furthermore, providers must verify beforehand that the source of the asset is not facing any sanctions. Both the parties also agreed to set up a public register that will contain the lists of compliant and non-compliant CASPs.

These rules will also be applied to transactions made from un-hosted wallets to wallets controlled by CASPs. If a customer makes transactions to his own account, CASP will have to verify whether the receiving address is still owned and operated by the customer himself.

Exemption: These rules will not be implemented on P2P transfers conducted without a provider such as on exchange platforms.

Expected Result of This Move

Thanks to the amendment in rules, crypto transfers will be monitored more closely to catch money-launderers, terrorist funders, and other criminals. In other words, it can be regarded as the new anti-money laundering (AML) policy. Crimes in the crypto world have been increasing significantly, especially in June 2022, more than 10 major cases have been reported with more than 100m dollars’ worth of crypto at stake.  This move will help to curb this menace.