The European Commission issued such a statement on Tuesday, July 20th. The proposal would make cryptocurrencies more traceable, which would help prevent terrorist financing and money laundering.
The European Commission stated that cryptocurrencies would be subject to the same anti-money laundering provisions as credit transfers. In other words, the provision of anonymous encrypted wallets is also prohibited, just as anonymous bank accounts are already prohibited under EU money laundering rules.
“Given that transfers of virtual assets involve similar money laundering and terrorist financing risks as transfers of funds … it therefore seems logical to use the same instrument to address these common issues,” the Commission said.
Although some companies transferring cryptocurrencies are already covered by anti-money laundering regulations, the new proposals would extend such provisions to the entire cryptography industry and force all companies to take care of their customers, the commission said.
Under such proposals, a company that transfers a cryptocurrency to a customer will have to record its address, name, account number, date of birth, and recipient name. The receiving company must also check on behalf of the beneficiary whether any of the required information is missing.
Proposals can take at least two years before they become law. Such proposals will certainly need the consent of the Member States and the European Parliament in order to become law.
Europe takes into account the encryption regulation
In September 2020, the European Commission put forward plans for cryptocurrency regulation with the first attempt to control emerging technology. During that time, the Commission acknowledged that the future of funding is digital, but noted the need to reduce potential risks.
The new provisions of the Agency were intended to minimize the risks for investors while providing legal certainty for companies issuing such funds.
One of the aims of the new legislation was to minimize market fragmentation in the sector. The European Commission stated that several digital property providers work in only one Member State. The new plan indicated that cryptographic providers approved by one of the 27 EU countries would provide their services in all other Member States.
During that period, the Commission also announced that it would impose stricter rules on companies issuing standard models, as there have been concerns about whether issuers have the required funds to support such tokens.
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