London, March 31 (BUS): European Union lawmakers are set on Thursday to support stricter safeguards for transfers of bitcoin and other cryptocurrencies, in the latest sign of regulators’ tightening of the free-traffic sector.
Two committees in the European Parliament reached cross-party concessions for a vote. Crypto exchange Coinbase Global Inc has warned that the rules will usher in a monitoring system that stifles innovation.
The $2.1 trillion crypto sector is still incompletely regulated worldwide. Reuters reports that fears that bitcoin and its peers may be financially destabilizing and used for crime has accelerated the work of policymakers to bring the sector to heel.
Under a proposal first introduced last year by the European Union’s Executive Committee, crypto companies such as exchanges are required to obtain, retain and provide information on those involved in transfers.
This would make it easier to identify and report suspicious transactions, freeze digital assets, and discourage high-risk transactions, said Ernest Ortason, a Spanish Green Party lawmaker who helps guide the action through Parliament.
The Commission had proposed that the rule be applied to transfers of 1,000 euros ($1,116) or more, but under the agreement between the parties, this minimum rule has been abolished, meaning that all transfers will be within its scope.
Ortasson said removing the threshold brings the bill into line with rules issued by the Global Financial Action Task Force, which sets anti-money laundering standards. These rules mean that crypto companies must collect and share data about transactions.
The exemption for low-value transfers is not appropriate, Ortasson said, as crypto users can evade the rules by creating an almost unlimited number of transfers, also citing the small amount involved in transfers associated with some crimes.
Committees of lawmakers have also approved new provisions on digital currency wallets held by individuals, not exchanges, and the creation of an EU list of non-compliant or high-risk crypto-asset service providers.
Coinbase Chief Legal Officer Paul Grewal said in a blog post Monday that traditional cash, not cryptocurrency, is the most common way to hide financial crimes.
EU countries share a common opinion with parliament on the final version of the law and countries have already agreed among themselves that there should be no minimum.
FA