EU Lawmakers to Vote on Tougher Crypto Transaction Requirements

Today, European lawmakers will vote on a proposal for a “regulation on information accompanying transfer of fund and certain crypto assets” (the so called “travel rule” regulation). If approved, this new law would increase the information requirements that crypto asset providers will need to collect and share for each transaction.

The joint committee on Economic and Monetary Affairs and the Committee on Civil Liberties, Justice and Home Affairs will hold a meeting at 13.45 CET, and the votes are expected to be around 17.00 CET. According to Reuters, the parliamentarians have ironed out their differences and have reached a compromise.

Under the first proposal put forward last year by the European Commission, crypto firms such as exchanges would have to obtain, hold and submit information on those involved in a transfer with the purpose of combating money laundering.

But one of the most controversial amendments to the original draft is the removal of a “de minimis” rules for small transactions. The original version proposed was meant to apply to transfers worth € 1,000 or more, but under the new agreement reached by the committees, this “de minimis” rule has been scrapped — all the transactions will be subject to the new reporting requirements.

Ernest Urtasun, the co-rapporteur of the report in the European Parliament, said that removing this threshold brings the draft law into line with rules from the global Financial Action Task force and sets standards for combating money laundering.

The European parliament proposed 80 amendments to the original proposal including removing the “de minimis” transactions, extending the scope of the law to “cryptoATMs,” requiring crypto assets providers to obtain information on the source and destination of the transfer (“know-your-transaction”) and prohibiting transfers involving non-compliant crypto-asset services providers, just to name a few.

The crypto industry has shown its discomfort with the new rules, in particular with the removal of the “de minimis” rule. Paul Grewal, chief legal officer at Coinbase, published an opinion on Monday urging others to make their voice heard before today’s vote.

“If adopted, this revision would unleash an entire surveillance regime on exchanges like Coinbase, stifle innovation, and undermine the self-hosted wallets that individuals use to securely protect their digital assets.”

Mr. Grewal emphasized that cash is still the most popular way to hide illicit financial activity — and unlike cash, law enforcement can track and trace digital asset transfers with advanced analytics tools. It went further, saying that by removing the “de minimis” rule, crypto will be treated differently from fiat, which has a € 1,000 threshold.

The European Parliament’s joint committee may approve the draft report today, which means the EU parliament would have a common position for the next step in the legislative process: negotiation with the European Council and member states.

In today’s vote, the parliament may also vote to enter into interinstitutional negotiations, known as “trialogue,” with the Council and the European Commission. It may take months of negotiations before a final text is agreed among the institutions and sent for an ultimate vote.

Read also: EU Crypto Regulation Still Faces Long Legislative Road Despite Vote

U.K. Makes U-Turn in Crypto Registration

The U.K. Financial Conduct Authority (FCA) has extended a temporary licensing program for cryptocurrency firms that was expected to end on March 31, according to the Financial Times. Crypto companies could use this temporary registration from 2020 to provide services until their applications were reviewed, but those companies that couldn’t obtain the full registration would need to stop their services by April 1.

The reason for this expansion is to allow the 12 firms with pending applications to continue operating while they wait for a response from the regulator. PYMNTS wrote about the complicated situation of these 12 firms, including powerhouses like Revolut and Blockchain.com, given the legal limbo they could find themselves in the interim.

Read More: UK to Propose New Crypto Rules While FCA Closes Registration