LONDON (CNA) – European Union (EU) lawmakers were set yesterday to back tougher safeguards for transfers of bitcoin and other cryptocurrencies, in the latest sign that regulators are tightening up on the freewheeling sector.
Two committees in the European Parliament have thrashed out cross-party compromises to be voted on. Crypto exchange Coinbase Global Inc has warned the rules would usher in a surveillance regime that stifles innovation.
The USD2.1 trillion crypto sector is still subject to patchy regulation across the world.
Concerns that bitcoin and its peers could upset financial stability and be used for crime have accelerated work by policymakers to bring the sector to heel.
Under the proposal 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 Spanish Green Party lawmaker Ernest Urtasun, helping to steer the measure through the Parliament.
The Commission had proposed applying the rule to transfers worth EUR1,000 or more, but under the cross-party agreement this ‘de minimis’ rule has been scrapped – meaning all transfers would be in scope.
Urtasun said removing the threshold brings the draft law into line with rules from the global Financial Action Task Force that sets standards for combatting money laundering. Those rules mean crypto firms must collect and share data on transactions.
An exemption for low value transfers is not appropriate, as crypto users could dodge the rules by creating an almost unlimited number of transfers, Urtasun said, also citing the small amounts involved in transfers linked to some crime.