The European Parliament officially announced the interim agreement on the regulation of crypto assets, further strengthening anti-money laundering regulations

Source: European Parliament official website

Compiled by: Hu Tao, Chain Catcher

On the evening of June 29 local time, representatives from the European Parliament and the EU Council reached a provisional agreement on a regulatory framework for crypto assets, aimed at ensuring that cryptocurrency transfers can always be tracked and preventing suspicious transactions, further strengthening anti-money laundering regulations.

It is reported that the focus of the agreement is on tracking and identifying the transfer of crypto assets, proposing that crypto asset service providers (CASPs) are obligated to provide information on the source and beneficiaries of crypto asset transfers to the competent authorities. If a customer sends or receives more than 1,000 euros to their own non-custodial wallet, the CASP will need to verify whether that non-custodial wallet is effectively owned or controlled by the customer.

The European Parliament stated that this legislation is part of the new EU anti-money laundering framework and represents the EU's first rules for tracking the transfer of crypto assets such as Bitcoin and electronic money tokens, ensuring that crypto assets can be tracked like traditional remittances.

According to Cointelegraph, the EU Council reached an agreement on Wednesday regarding part of the positions in the proposal to establish a dedicated anti-money laundering agency (AMLA), which will oversee certain crypto asset service providers or CASPs.

However, the aforementioned agreement currently only serves as a rough regulatory framework, and the European Parliament, the EU Council, and the Commission are examining the technical aspects of the text. Subsequently, the agreement must be approved by the Economic and Monetary Affairs, Civil Liberties and Justice Committees, as well as the entire Parliament, to come into effect.

According to the press release published on the European Parliament's official website, the agreement mainly includes the following three parts:

Traceability starting from the first euro sent

The agreement extends the so-called "travel rule" already existing in traditional finance to cover the transfer of crypto assets. This rule requires information about the source of the assets and their beneficiaries to be transmitted with the transaction and stored by both parties involved in the transfer. If there is an investigation into money laundering and terrorist financing, the crypto asset service providers (CASPs) will be obligated to provide this information to the competent authorities.

As crypto asset transactions can easily bypass existing thresholds that might trigger traceability requirements, parliamentary negotiators assured that there would be no minimum threshold and no initial proposal for low-value transfer exemptions.

Regarding the protection of personal data, including names and addresses required by the travel rule, negotiators agreed that such data should not be sent if the recipient cannot guarantee the maintenance of privacy.

Curbing money laundering and terrorist financing

Before providing crypto assets to beneficiaries, providers must verify that the source of the assets is not subject to restrictive measures or sanctions, and that there is no risk of money laundering or terrorist financing.

Negotiators agreed that the currently negotiated Market in Crypto-Assets (MiCA) rules will cover the establishment of a public registry for non-compliant and unregulated CASPs, and EU CASPs will not be allowed to transact with this registry.

Non-custodial wallets

These rules will also cover transactions involving so-called non-custodial wallets (crypto asset wallet addresses held by private users) when interacting with custodial wallets managed by CASPs.

If a customer sends or receives more than 1,000 euros to their own non-custodial wallet, the CASP will need to verify whether that non-custodial wallet is effectively owned or controlled by the customer.

These rules do not apply to person-to-person transfers conducted without a provider (e.g., Bitcoin trading platforms) nor to transfers conducted between providers acting on their own behalf.

In addition, several EU Parliament officials commented on the regulation.

ECON co-rapporteur Ernest Urtasun stated, "This new regulation strengthens Europe's framework for combating money laundering, reduces fraud risks, and makes crypto asset transactions safer. The EU travel rule will ensure that CASPs can prevent and detect sanctioned addresses, and that the transfer of crypto assets is fully traceable. This regulation introduces one of the most ambitious travel rules for crypto asset transfers in the world. We hope other jurisdictions will follow the ambitious and strict approach agreed upon by co-legislators today."

LIBE co-rapporteur Assita Kanko said, "For a long time, crypto assets have been a concern for our law enforcement agencies. Terrorists use cryptocurrencies for fundraising, and criminals launder money through cryptocurrencies. This truly harms people's lives and raises questions about the crypto industry. Today, we have taken a significant step in addressing these issues. The abuse of crypto assets will become more difficult, and innocent traders and investors will be better protected. Extending the travel rule will make that world safer."