EU Policymakers Unveil Plan To Regulate Bitcoin and Crypto Transactions

EU policymakers are discussing a plan to increase regulatory oversight of the emerging cryptocurrency industry.

A new proposal from the European Commission (EC) would require businesses to maintain records of the name, address, date of birth and account number of clients as they move cryptocurrency from one wallet to another.

The rules are designed to identify the senders and recipients of crypto transactions, mirroring the know-your-customer and anti-money laundering requirements used when customers wire money from one bank account to another.

“The crypto-asset service provider of the originator must ensure that transfers of crypto-assets are accompanied by the name of the originator, the originator’s account number, where such an account exists and is used to process the transaction; and the originator’s address, official personal document number, customer identification number or date and place of birth; the crypto-asset service provider of the originator must also ensure that transfers of crypto assets are accompanied by the name of the beneficiary and the beneficiary’s account number, where such an account exists and is used to process the transaction.

The crypto-asset service provider of the beneficiary must implement effective procedures to detect whether the information on the originator is included in, or follows, the transfer of crypto-assets. The crypto-asset service provider of the beneficiary must also implement effective procedures, including, where appropriate, ex-post monitoring or real-time monitoring, in order to detect whether the required information on the originator or the beneficiary is missing.”

A press release from the EC says the proposal aims to ensure “full traceability” of senders and recipients as businesses move crypto on behalf of their clients.

“At present, only certain categories of crypto-asset service providers are included in the scope of EU AML/CFT (Anti-Money Laundering and Countering the Financing of Terrorism) rules. The proposed reform will extend these rules to the entire crypto sector, obliging all service providers to conduct due diligence on their customers. Today’s amendments will ensure full traceability of crypto-asset transfers, such as Bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing. In addition, anonymous crypto asset wallets will be prohibited, fully applying EU AML/CFT rules to the crypto sector.”

At this point in the process, the European Parliament and Council is examining the proposal. The Commission says it looks forward to a “speedy” legislative process.

“The future AML Authority should be operational in 2024 and will start its work of direct supervision slightly later, once the directive has been transposed and the new regulatory framework starts to apply.”

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