European Union: First Law on Crypto Assets | Atalayar
The crypto universe has expanded with bitcoin, ethereum, litecoin and bitcoin cash. There is an increasingly widespread literature around cryptocurrencies: one in favor of their utility and as the face of a future that seems inevitable, without physical money, the burial of all coins and hard currency.
Another is black: it talks about fraud, money laundering, about serving crime to evade banks and financial systems by providing them with a greyish and opaque parallel financial world from the internet. The mafia’s money goes into the digital money universe, at least that’s what the gossip says.
Some sites like bitcoin.org offer anonymity in transactions and fast international payments: “Bitcoins can be transferred from Africa to Canada in 10 minutes. There is no bank to delay the process, no outrageous fees and the transfer cannot be frozen”.
Without international regulation, cryptocurrencies remain outside the current financial architecture. In the EU, it is not only the impact on customers that is of concern, but the money laundering detected through bitcoins: Chainalysis recently pointed out that more than €26 billion of cryptocurrencies acquired through illegal means were laundered in 2022.
It has been all the opaque money behind cryptoassets that prompted the European Parliament to approve the first Cryptoassets Regulation Act on April 20, which it had discussed at length in recent months. After a series of consultations and debates, the first European legislation was approved with 529 votes in favour; 29 against and 14 abstained.
The EU has the first major regulation to track transfers of crypto assets, prevent money laundering and have a supervisory framework for customer protection.
The legislation lays the groundwork for their 27 member states to track transfers of crypto assets such as bitcoins and e-money.
The text, which was tentatively adopted by the negotiators of the European Parliament and the European Council in June 2022, aims to ensure that crypto transfers, as is the case for all other financial transactions, are always traceable and suspicious transactions can be blocked.
“The so called “travel rule”, already used in traditional finance, will cover crypto asset transfers in the future. Information about the source of the asset and its beneficiary would have to “travel” with the transaction and be stored on both sides of the transfer,” according to the approved text.
The law will also cover transactions above €1,000 from so-called self-hosted wallets (a cryptoasset wallet address of a private user) when they interact with hosted wallets managed by crypto-active service providers. The rules do not apply to person-to-person transfers without a provider or between providers acting on their own behalf.
On the subject
This first law was a big step for the EU. Known as MiCA, this crypto-asset market law regulates the relationship between issuers and service providers, with the aim of protecting consumers and investors, as well as increasing financial stability and innovation. The law enters into force from the second half of 2024.
According to Stefan Berger MEP for the European People’s Party (EPP), The EU will be at the forefront of the token economy and consumers will be protected from deception and fraud.
Ernest Urtasun, a member of the Economic and Monetary Affairs Committee on Crypto Asset Transfers, said that illegal flows of crypto assets move rapidly around the world, with a high probability that they will never be detected.
But it will also allow them to operate under a more secure framework, said Assita Kanko, a member of the Committee on Civil Liberties, Justice and Home Affairs.
The approved law empowers the 27 EU member states to sovereignly choose the authority best suited to carry out regulation and supervision of crypto-assets. Finally, a big step has been taken!
