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Crypto companies in the European Union may be forced to collect data on senders and recipients of transactions
The so-called travel rule requirements introduced in the EU in 2019 oblige banks and payment companies to store information on the movement of funds between payers and recipients. Soon, in the coming weeks, the European Parliament will have to vote on the adoption of a new version of the travel rule.
The current travel rule requirements require EU banks to report to the financial authorities on every transaction in excess of €1,000. The claims were seen as a victory in the fight against money laundering, but the EU wants to modernise them by removing the threshold for reporting.
European exchanges may be required to report all crypto transactions
If the new travel rule option is adopted, exchanges will be instructed to report all crypto transactions, even if the amount is only € 5.
The authors of the new requirements argue that small crypto transactions are often used to finance and conceal criminal activities, since illegal capital can move anonymously and without any geographical restrictions.
“Many exchanges actively opposed the abolition of the threshold for reporting transactions. However, from what I recently heard from a conversation with a member of the European Parliament, we can draw the following conclusion: the majority supports the idea of lifting the threshold, “said Ajinkya Tulpule, head of the compliance department of the bitFlyer cryptocurrency exchange.
Tulpule argues that crypto exchanges may have to suspend certain transactions until KYC processes are fully completed. This can lead to delayed settlement of transactions and many other problems.
“There are some coins that are not tracked by transaction monitoring systems,” Tulpule said. This is another drawback that cryptocurrency exchanges will have to face when they get used to the new regulatory regime.
Markets in Crypto Assets (MiCA) legislation is also looming on the crypto industry’s horizon in Europe, aimed at “standardizing distributed ledger technology (DLT) and regulating virtual assets in the EU, as well as protecting users and investors.”
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