European Union lawmakers backed new safeguards for tracing transfers of bitcoin and other cryptocurrencies on Thursday, in the latest sign that regulators are tightening up on the freewheeling sector.
Two committees in the European Parliament jointly voted by 93 in favour and 14 against on cross-party compromises which crypto exchange Coinbase Global Inc warned would usher in a surveillance regime that stifles innovation.
The $2.1 trillion crypto sector is still subject to patchy regulation across the world.
Under the draft law first put forward last year by the EU’s executive European Commission, crypto firms such as exchanges would have to obtain, hold, and submit information on those involved in transfers.
That would make is easier to identify and report suspicious transactions, freeze digital assets, and discourage high-risk transactions, said Ernest Urtasun, a Spanish Green Party lawmaker helping to steer the measure through the parliament.
Currently there are no EU requirements for tracing crypto transfers and the Commission had proposed applying the new rule to transfers worth 1,000 euros ($1,116) or more, but lawmakers on Thursday voted to scrap the ‘de minimis’ threshold, meaning all transfers would be in scope.
Urtasun said removing the threshold brought the draft law into line with rules from the global Financial Action Task Force that sets standards for combating money laundering. Those rules mean crypto firms must collect and share data on transactions.
The lawmakers’ committees also backed putting transfers from ‘unhosted’ crypto wallets held by individuals, not exchanges, under the tracing rule, and on the creation of a list by the EU’s European Banking Authority of high-risk or non-compliant cryptoasset service providers.
Coinbase Chief Legal Officer Paul Grewal said in a blog on Monday that traditional cash, not crypto, was by far the most popular way to hide financial crime.
EU states have joint say with parliament on the draft law and representatives from both parties will now meet to agree a final version. Countries have already agreed among themselves there should be no de minimis.
($1 = 0.8961 euros)
First Published: IST