The authorities would strengthen measures towards exchanges and other services. The legislative adjustment would also comply with the rules of the Financial Action Task Force.
The European Commission revealed a proposal for a regulatory adjustment so that all transactions with bitcoin (BTC) and other cryptocurrencies are traceable, and identifiable with user data. The agency is pushing for all digital asset providers to apply the so-called “travel rule” to operations.
The “travel rule” means that every operation that exceeds a set amount must record the details of the one who sends and receives the funds. This information must contain: names and surnames, amount and date of the operation, physical address of both users, date of birth and number of associated accounts, all as a KYC or “Meet your client” control.
In this case, exchanges in all their forms, whether centralized, decentralized, custodial services or P2P platforms, must respect the regulation. The European Commission would strengthen the measures with the sole intention of fighting money laundering and terrorist financing (AML / CFT).
At present, only some categories of crypto asset service providers are included in the scope of the AML / CFT rules of the European Union. The proposed reform will extend these rules to the entire cryptocurrency sector,leading all service providers to apply due diligence to their customers.
Tighter Regulation on Bitcoin
The legislative adjustment that the organization is trying to establish follows the guidelines established by the Financial Action Task Force (FATF). This organization has in the past issued suggestions for countries and other institutions to establish stricter regulations in relation to the bitcoiner ecosystem.
If an individual is going to make a withdrawal from an exchange, the user must first bring the address to which the funds will go. That is, each trader could only withdraw funds to the supplied addresses and not to any BTC address.
In the draft of the new regulations, the FATF highlights a special emphasis on identifying which are the digital asset service providers. These are all those services that function as platforms for exchange, support or development of cryptocurrencies.
As they are categorized as providers of this kind, most entities must accept “Know your customer” (KYC) guidelines. In these cases, these types of services would have to meet the same requirements of centralized exchanges.
On the other hand, the traceability of operations with bitcoin, is one of the features by nature of its network. Any person, entity or regulatory entity can closely follow the operations of its users.
Now the European Parliament and the member states of the union are the ones who will decide if the legislation proceeds or suffers a rejection. In any case, the deliberations and a possible adoption of the proposal could last for two years.
By: Jenson Nuñez
