Lawmakers in Europe voted in favor of the Funds Transfer Regulation, a procedure that could end anonymous crypto transactions, even the less prominent ones.
The Parliament of the European Union (EU) voted this Thursday in favor of a controversial rule that threatens the anonymity of cryptocurrencies and could limit the use of self-custody wallets throughout the bloc.
European lawmakers approved the so-called “Transfer Funds Regulation” (TFR) in a vote held on March 31. News outlet CoinDesk reviewed. MP Stefan Berger also released unfavorable results for the digital currency sector through his Twitter account.
Stefan Berger regretted the results of the amendments to TFR. According to Berger, this situ weakens Europe as a spot for innovation; he also notes that the provision had won bipartisan approval in Parliament.
The regulation in question suggests revising the current Funds Transfer Regulation (TFR) to expand the requirement for instructions to attach information about the parties carrying digital asset transactions. It also intends to include non-custodial wallet digital asset transactions to anti-money laundering (AML) control protocols.
What the Regulation Proposes
A report led by The Block, which reviewed the latest draft of the bill, said the rule would need users of “crypto-asset transfer providers,” typically cryptocurrency exchanges, to highlight the identity of the beneficial owner of wallets.
The policy would also need merchant platforms that make those transfers easier to confirm that information regarding the entity. At the same time, the regulation would extend anti-money laundering requirements that apply to conventional payments surpassing €1,000 ($1,114) aimed at the digital assets environment.
The core issue with these requirements is that it could be difficult for crypto service providers to confirm a non-custodial counterparty. Patrick Hansen of blockchain firm Unstoppable Defi previously warned that these measures could guide the closure of smaller entities and undermine the industry’s growth in Europe.
The term self-custody wallets, also called “non-hosted” or “non-custodial,” refers to software or hardware to house digital assets that are not in the hands of a third party. Some examples of such wallets are MetaMask and WalletConnect.
According to The Block, the regulation itself defines them as “a crypto asset wallet address that is not held or managed by a crypto asset transfer provider, “according to The Block.
Rule Passed Despite the criticism
According to CoinDesk, a separate legal bill under recent debate would avoid transfers from being carried out to “non-compliant” crypto service providers, including those that carry out activities in the EU without permission or are not affiliated with or set up in any jurisdiction.
Various center-right European People’s Party (EPP) representatives rejected many problematic changes, lamenting a “de facto ban on self-hosted wallets.” Among them, Berger (EPP member) condemned the position of his S&D counterparts (Socialists and Democrats), who supported the reforms.
By: Jenson Nuñez
