If the proposal is passed, crypto firms will be required to reveal info about the sender and receiver of crypto transfers.
More than 90 lawmakers voted in favor of the proposal
Photo Credit: Unsplash/ Maximalfocus
Committees within the European Parliament have voted in favour of new transfer of funds regulation surrounding unhosted crypto wallets. The European Parliament's committee on Civil Liberties, Justice and Home Affairs (LIBE), and the Committee on Economic and Monetary Affairs (ECON) have voted to approve amendments to its Transfer of Funds Regulation that would require crypto exchanges to verify the identities of the owners of unhosted wallets with which they transact in advance of a transaction. The bill is not in the final stage of the legislative process, with a plenary session expected in April.
Legislators hope to ensure traceability of transfers between crypto service providers and so-called unhosted wallets so as to be able to better identify possible suspicious transactions and potentially block them.
An unhosted wallet is a term used by the Financial Action Task Force and the US Financial Crimes Enforcement Network, and adopted by other government and regulatory bodies. It means that an individual maintains their own private keys, known in the crypto industry as a “wallet” or “self-hosted wallet”, to delineate between assets controlled by a financial institution acting as a custodian and an individual.
Requirements to check if the information on the payer or payee is accurate is to be imposed on crypto transfers that exceed EUR 1,000 (roughly Rs. 84,000), according to a draft report. Pending a final vote, the bill could face trilogues with the European Commission and European Council as soon as mid-April.
However, while the European Commission and the European Council's versions of the regulation include an equivalent requirement for crypto service providers to ask users to identify the owners of external self-hosted wallets, they do not demand those servicers — primarily exchanges, to independently verify the identities of those wallet owners themselves.
The new provisions, while threatening to self-hosting wallets, are on track to face significant blowback from the Council and Commission.
Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.
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