European lawmakers set to toughen crypto transfers

LONDON, March 31 (Reuters) – European Union lawmakers were expected to back tougher safeguards for transfers of bitcoin and other cryptocurrencies on Thursday, in the latest sign that regulators are tightening up on the freewheeling sector .

Two committees of the European Parliament have drawn up cross-party compromises to be voted on. Crypto exchange Coinbase Global Inc (COIN.O) warned that the rules would introduce a surveillance regime that stifles innovation.

The $2.1 trillion crypto sector is still subject to uneven regulation across the globe. Concerns that bitcoin and its peers could disrupt financial stability and be used for criminal purposes have accelerated the work of policymakers to bring the industry to heel.

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According to the proposal first presented last year by the EU’s executive European Commission, crypto businesses such as exchanges should obtain, retain and submit information about those involved in transfers. Read more

This would make it easier to identify and report suspicious transactions, freeze digital assets and discourage high-risk transactions, said Ernest Urtasun, a Spanish Green Party MP who helped push the measure through parliament.

The Commission had proposed to apply the rule to transfers worth 1,000 euros ($1,116) or more, but under the cross-party agreement, this “de minimis” rule was removed – meaning that all transfers would be affected.

Urtasun said removing the threshold aligns the bill with the Global Financial Action Task Force rules that set anti-money laundering standards. These rules mean that crypto firms must collect and share transaction data.

An exemption for low-value transfers is not appropriate because crypto users could dodge the rules by creating an almost unlimited number of transfers, Urtasun said, also citing the small amounts involved in transfers related to certain crimes.

The lawmakers’ committees also agreed new provisions on crypto wallets held by individuals, not exchanges, and the creation of a European list of high-risk or non-compliant crypto-asset service providers.

Coinbase Chief Legal Officer Paul Grewal said in a blog post on Monday that traditional cash, not crypto, was by far the most popular way to conceal financial crime.

EU states have a say with parliament on the final version of the law and countries have already agreed amongst themselves that there should be no de minimis.

($1 = 0.8961 euros)

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Reporting by Huw Jones and Tom Wilson; Editing by Catherine Evans

Our standards: The Thomson Reuters Trust Principles.

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