EU Passes A Bill to Trace the Flow of Bitcoin & Crypto Assets In Regulatory Tightening Measures

On Wednesday, June 29, the Parliament and Council negotiators reached a deal over a new bill that will allow them to trace the transfers of crypto assets like Bitcoin and other digital asset tokens.

The agreement is nothing but an extension of the “travel value” rule already available in traditional finance. As per the EU, the new rule aims to block suspicious transactions taking place in the crypto market. The official press release notes:

This rule requires that information on the source of the asset and its beneficiary travels with the transaction and is stored on both sides of the transfer. Crypto-assets service providers (CASPs) will be obliged to provide this information to competent authorities if an investigation is conducted into money laundering and terrorist financing.

Tightening the Regulatory Norms

The latest rules come as part of EU regulatory tightening measures for anti-money laundering. The EU said that crypto-asset transactions currently circumvent existing thresholds.

But the parliament negotiators said that there will be no minimum threshold nor exemptions for low-value transfers, as proposed earlier. These EU rules have drawn sharp criticism from existing crypto market players such as Coinbase. The exchange had further argued that with the growing adoption of crypto, there could be multiple-low value crypto transactions. Sharing user identity for such low-value transactions is neither feasible nor right from the privacy point of view.

On the matter of personal data that requires the name and crypto address, the negotiators said that “if there is no guarantee that privacy is upheld by the receiving end, such data should not be sent”. In the press release the EU lawmakers added:

Before making the crypto-assets available to beneficiaries, providers will have to verify that the source of the asset is not subject to restrictive measures or sanctions, and there are no risks of money laundering or terrorism financing.

Upon the interaction of the unhosted wallets with the hosted wallets, the CASPs will need to ensure that the transactions above 1000 euros have been verified and whether “the un-hosted wallet is effectively owned or controlled by this customer”.