EU facing new crypto laws
In order to put a stop to money laundering using cryptocurrencies, the EU is planning a change in the law. According to experts, this could have far-reaching consequences. Moreover, its accuracy is doubtful, but discriminatory. It is no secret that authorities worldwide want to regulate cryptocurrencies and participate in their success. However, taxation and compulsory regulation are different approaches that pursue different intentions. While the taxation faction wants its share of the success, the regulators put forward arguments that ostensibly focus on protecting consumers and resources, but ultimately always smack of influencing the market.
Frequent criticisms of internet currencies are, on the one hand, the high power consumption during mining and, on the other, the lack of protection for investors as well as the danger of money laundering, possible tax evasion and the prevention of terrorist financing. The EU Parliament now wants to tackle money laundering and has launched the draft law “Markets in Crypto-Assets (MiCA)”. A passage that would have resulted in a ban on “unsustainable” crypto services was fortunately not adopted in March – with it, bitcoin and other computationally intensive coins based on the “proof of work” concept would no longer have been allowed in the EU.
Abolition of the threshold value for notifications?
Now they want to try it via the threshold value for transaction reports: The extension of the “Transfer of Funds Regulation” (TFR) is under consideration. While the threshold for reportable transactions is currently 1,000 euros, the threshold for reporting would be eliminated if the TFR were expanded and all trading exchanges would have to report all crypto transactions of any amount to the authorities.
However, this poses a new challenge: After all, the large amount of new data has to be processed in a GDPR-compliant manner. After all, the General Data Protection Regulation provides for the principle of data economy. Another side effect is the slowing down of processes – one of the main advantages of cryptocurrencies besides decentralisation. However, if the users first have to be laboriously identified before a transaction can be carried out, the speed advantage is gone. Moreover, the structures of the providers are not designed for such comprehensive data collection and reporting, making rapid and smooth implementation more than questionable.
Difficult and distorting competition
Experts are critical of the political efforts: Marc Toledo, GF of crypto exchange Bit4You and director of the Blockchain Association of Belgium, told “CoinDesk”: “A full implementation of the ‘travel rule’ will prove difficult, as not every technology allows the storage and transmission of this particular information. It would be much easier to set up a global register of identified addresses, a process also used in banking.”
Proponents of the adjustment, on the other hand, argue that even small amounts can be used to finance terrorism or money laundering if they are subsequently re-bundled elsewhere. “It is always good to take further measures against money laundering and terrorist financing, but it is unfortunate that a ‘traditional’ approach to dealing with risks in a new sector is being taken,” criticises Olivier van Duijn, who runs the Dutch crypto exchange LiteBit, in an interview with CoinDesk. Due to the different times of implementation in the various EU countries, there is also an uneven playing field. It will be interesting to see what decision the politicians make – but it should be within the next few weeks.