The European Parliament and Council have reached provisional agreement on a new bill to ensure that crypto asset transfers can always be traced, and blocked when necessary.
This legislation was confirmed by negotiators from the Parliament and Council and will align with the Markets in Crypo-asset Rules (MICA) and a new EU anti-money laundering programme.
To promote “traceability” of crypto-assets, the agreement develops the “travel rules” existing for traditional financial assets and fund flows, requiring parties on both sides of the transaction to maintain information regarding the source of the asset and the beneficiary.
Crypto-asset service (CASPs) providers are required to disclose this information to financial supervisors in case of investigation into moneylaundering and terrorist financing. No minimum thresholds or de minimis exemptions will be applied for low-value transfers.
Under MICA, a public register will be created of non-compliant and non-supervised CASPs and EU CASPs will not be permitted to trade with entities on this list.
Before processing any transfer of assets to beneficiaries, CASPs will be required to verify that the assets are not subject to sanctions or restrictive measures and that the transfer does not present a risk of enabling moneylaundering or terrorist financing.
In cases where a customer sends or receives a sum in excess of €1000 involving an unhosted wallet, the CASP must verify that this unhosted wallet is owned or controlled by the customer. An unhosted wallet is a crypto-asset wallet address that is held in the custody of a private user.
Ernest Urtasun, co-rapporteur for ECON, says: “This new regulation strengthens the European framework to fight moneylaundering, reduces the risks of fraud and makes crypto-asset transactions more secure.
“The EU travel rule will ensure that CASPs can prevent and detect sanctioned addresses and that transfers of crypto-assets are fully traceable. This regulation introduces one of the most ambitious travel rules for transfers of crypto assets in the world. We hope other jurisdictions will follow the ambitious and rigorous approach the co-legislators agreed today.”
MICA will apply to all utility, asset referenced and e-money tokens and regulates all CASPs and other financial companies that wish to offer crypto-asset services.
