European Union parliamentarians have voted in favor of stricter rules requiring cryptocurrency transfers to be traceable like e-money transfers.
The proposed new rules require cryptocurrency service providers to maintain records of the identity of the sender and recipient of transfers and to make these records available to “competent authorities.”
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They are part of a European package on the fight against money laundering and the financing of terrorism, following a proposal from the European Commission presented last July. The Commission wanted to ban anonymous cryptocurrency wallets.
European lawmakers want the European Banking Authority (EBA) to create a public register of cryptocurrency providers that present a high risk of breaching anti-money laundering and counter-terrorist financing rules, as well as a “list non-exhaustive list of non-compliant suppliers”.
“Before making crypto-assets available to beneficiaries, providers should verify that the source of the asset is not subject to restrictive measures and that there are no risks of money laundering or financing terrorism,” they announced.
Cryptocurrencies to guarantee anonymity
MEPs from the Economic and Monetary Affairs Committee (ECON) and the Civil Liberties Committee (LIBE) voted on the text on Thursday, with 93 votes for, 14 against and 14 abstentions. It will be put to the vote during the plenary session of the European Parliament in April.
“Illicit flows of crypto-assets circulate largely undetected in Europe and around the world, making them an ideal instrument to guarantee anonymity,” said Ernest Urtasun, vice-president of the Greens/European Free Alliance, in a press release. in Spain and co-rapporteur for ECON.
The latter notes the main changes made to the Commission’s proposal, in particular the removal of the minimum threshold of 1,000 euros for the monitoring of wire transfers, as this is not suitable for the methods of laundering criminals.
“Criminals use transfers of small amounts to conceal large transactions (smurfing). Multiple small transfers can be made automatically using multiple dispersed addresses. Criminal activities such as frauds, scams, hacks and financing of terrorism can be carried out with small amounts”, he wrote on Twitter.
Identity verification required
The public registry would aim to help providers identify non-compliant entities, high-risk crypto-asset service providers, services like cryptomixers and tumblers, and crypto-asset wallets with ties to criminal activity.
Regarding the protection of privacy, Ernest Urtasun notes that no “information will be included in the transfer itself, or transmitted to the counterparty, if there is a risk that this counterparty will not be able to protect the confidentiality Datas. We clarify the period and conditions of data retention”.
Furthermore, transfers to and from non-hosted wallets will be subject to traceability rules and reporting, and identity information will need to be verified.
A “critical vote”
Earlier in the week, Coinbase Chief Legal Officer Paul Grewal noted that law enforcement can already track and trace digital asset transfers with advanced analytics tools, noting that none of this requires to upset the established expectations of portfolio holders in terms of confidentiality.
Coinbase described the vote as a “critical vote” of the EU. Paul Grewal, for his part, warns: “If passed, this revision would trigger an entire surveillance regime on organizations like Coinbase, stifle innovation and undermine the self-hosted wallets that individuals use to securely protect their digital assets. »
Source: ZDNet.com