EU lawmakers intend to toughen crypto translations

PHOTO PHOTO: Representations of Bitcoin virtual currency can be seen in this illustration made on March 13, 2020. REUTERS / Dado Ruvic / Illustration /

March 31, 2022

Hugh Jones and Tom Wilson

LONDON (Reuters) – On Thursday, European Union lawmakers were set to support tougher guarantees for the transfer of bitcoins and other cryptocurrencies, indicating that regulators are tightening the freewheeling sector.

Two committees in the European Parliament have developed inter-party compromises for voting. The cryptocurrency exchange Coinbase Global Inc has warned that the rules will introduce a surveillance regime that stifles innovation.

The $ 2.1 trillion crypto sector is still subject to repeated regulation around the world. Concerns that bitcoin and its counterparts could disrupt financial stability and be used for crime have accelerated the work of politicians to bring the sector down.

According to a proposal first made last year by the European Commission, crypto firms such as exchanges will be required to receive, store and provide information about those involved in transfers.

This will make it easier to identify and report suspicious transactions, freeze digital assets and prevent high-risk transactions, said Ernest Urtasun, a member of the Spanish Green Party who helps manage the measure in parliament.

The commission proposed to apply this rule to transfers of 1,000 euros ($ 1,116) and more, but under the inter-party agreement this “de minimis” rule was repealed – meaning that all transfers would be within limits.

Urtasun said the removal of the threshold brings the bill in line with the rules of the Global Financial Action Task Force, which sets standards for combating money laundering. These rules mean that crypto firms must collect and share transaction data.

The exception for low-cost transfers is not appropriate because crypto users can evade the rules by creating an almost unlimited number of translations, Urtasun said, also referring to small amounts associated with transfers related to some crime.

Legislative committees have also agreed on new regulations on crypto-wallets held by individuals rather than on exchanges, and on the establishment of an EU list of providers of high-risk or non-compliant cryptocurrency services.

Coinbase CEO Paul Gruval said in a blog post Monday that traditional cash, not crypto, is by far the most popular way to hide financial crimes.

EU countries have a common opinion with parliament on the final version of the law, and countries have already agreed among themselves that de minimis should not be.

(1 dollar = 0.8961 euros)

(Report by Hugh Jones and Tom Wilson; edited by Catherine Evans)

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