Crypto-assets: European Parliament approves new rules for tracing transfers in the EU
Members of the European Parliament voted on April 20 to approve, with 529 votes in favour to 29 against and 14 abstentions, the first piece of EU legislation for tracing transfers of crypto-assets like bitcoins and electronic money tokens.
The text – which was provisionally agreed by the European Parliament and Council of the EU negotiators in June 2022- aims to ensure that crypto transfers, as is the case with any other financial operation, can always be traced and suspicious transactions blocked, the European Parliament said.
The so-called “travel rule”, already used in traditional finance, will in future cover transfers of crypto assets. Information on the source of the asset and its beneficiary will have to “travel” with the transaction and be stored on both sides of the transfer.
The law would also cover transactions above 1000 euro from so-called self-hosted wallets (a crypto-asset wallet address of a private user) when they interact with hosted wallets managed by crypto-assets service providers. The rules do not apply to person-to-person transfers conducted without a provider or among providers acting on their own behalf.
The European Parliament also gave its final green light with 517 votes in favour to 38 against and 18 abstentions, to new common rules on the supervision, consumer protection and environmental safeguards of crypto-assets, including crypto-currencies (MiCA). The draft law agreed informally with the Council in June 2022 includes safeguards against market manipulation and financial crime.
MiCA will cover crypto-assets that are not regulated by existing financial services legislation. Key provisions for those issuing and trading crypto-assets (including asset-reference tokens and e-money tokens) cover transparency, disclosure, authorisation and supervision of transactions. Consumers would be better informed about the risks, costs and charges linked to their operations. In addition, the new legal framework will support market integrity and financial stability by regulating public offers of crypto-assets.
Finally, the agreed text includes measures against market manipulation and to prevent money laundering, terrorist financing and other criminal activities. To counter money-laundering risks the European Securities and Markets Authority (ESMA) should set up a public register for non-compliant crypto assets service providers that operate in the European Union without authorisation.
To reduce the high carbon footprint of crypto-currencies, significant service providers will have to disclose their energy consumption.
The texts will now have to be formally endorsed by Council of the EU, before publication in the EU Official Journal. They will enter into force 20 days later.
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