The cryptocurrency industry is now worth approximately $2.1 trillion (€1.9 trillion) globally. However, regulation is still inconsistent and concerns have been raised about it being used by criminals and potentially causing financial instability.
To try and address this, EU lawmakers have backed tougher rules for anyone transferring Bitcoin and other types of cryptocurrencies in Europe.
The draft legislation would make it a legal requirement for cryptocurrency companies to collect and share data on transactions and anyone involved in transfers. This information would also need to be accessible to the relevant authorities if needed.
Additionally, it would allow the authorities to crack down on “unhosted” wallets that are held by individuals, as they would be required to declare transactions of over €1,000.
EU lawmakers argue that this would make it easier to identify and report suspicious transactions and freeze digital assets, which would discourage illegal or high-risk transactions.
But, the industry has thrived on being anonymous so far, and those working within the industry have warned that introducing this type of surveillance could stifle innovation, destroy privacy, and expose users to an increased risk of theft or fraud.
In a tweet, Patrick Hansen, head of strategy for decentralised finance (DeFi) start-up Unstoppable Finance, said this type of reporting regime would be a “recipe for disaster”, and that it would create “personal data honeypots” in government agencies and increase the risk of hacking. He added, “We have lost a battle, but this is far from over.”
Those in support of the measures argue that creating a public register for cryptocurrencies would help to prevent money laundering and other criminal activities.
The EU Parliament’s Committee on Economic and Monetary Affairs (ECON) and the Committee on Civil Liberties (LIBE) backed the proposals with 93 votes to 14 and 14 abstentions.
Now, the European Parliament is due to vote on the proposed regulations, and this will be followed by negotiations between parliament, the Commission, and the European Council.
Please follow and like us: