European Union (EU) lawmakers are tightening rules around cryptocurrency transfers, in light of the increasing use of crypto assets for money laundering.
According to Reuters, the new proposal will make it mandatory for cryptocurrency companies such as exchanges operating across the European Union to obtain, retain and provide information on any of their users involved in any transfers. The proposals aim to expand anti-money laundering (AML) requirements, a rule already in place in the traditional payment arena. This would make it necessary for cryptocurrency exchanges to report to the authorities if any transaction over €1,000 ($1,100) occurred.
For starters, the European Union (EU) is made up of 27 member states, all of which are located in Europe. This includes Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania and Slovakia Slovenia, Spain and Sweden.
Under the new draft rules, users who receive cryptocurrency must be limited to even the smallest amount, including transactions with non-hosted or self-hosted cryptocurrency wallets. According to the EU Commission, this will help the authorities to crack down on laundered money.
A Reuters report indicated that cryptocurrency exchanges dealing with any customer crypto assets must include the customer’s name, address, date of birth, account number and the name of the person who will receive the crypto assets. The recipient’s service provider should also check if any of the requested information is missing.
Furthermore, the new guidelines will ban the use of any anonymous wallet for crypto transactions. a Crypto wallet is where your cryptocurrency is Like Bitcoin, Ether, etc. Users can create an account on both KYC and anonymous cryptocurrency wallets. However, according to EU anti-money laundering rules, to facilitate any transaction, users will have to use a KYC crypto wallet.
“This will facilitate the identification and reporting of suspicious transactions, freezing of digital assets, and discouragement of high-risk transactions,” Reuters quoted Ernest Ortason, a member of the Spanish parliament for the Green Party, as saying. Urtasun helps guide the procedure through Parliament.
This development came despite the objections of Coinbase, one of the largest crypto companies in the European Union.
“Imagine if the EU required your bank to report to the authorities every time you paid your rent just because the transaction was over €1,000,” Coinbase CEO Brian Armstrong said in a tweet. “Or if you send money to your cousin to help out with groceries, the EU requires your bank to collect and verify private information about your cousin before letting you send money. How can the bank even comply? Banks will back down. That’s what we do now” .
Armstrong firmly believes that the new policy “disproportionately punishes cryptocurrency holders and undermines their individual rights in very worrying ways,” he added in the same Twitter thread.
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