Status: 07/12/2022 08:06 AM
Cryptocurrencies such as Bitcoin, Ethereum or Solana are increasingly used for money laundering. The EU is now countering this by becoming the first major economic region to regulate the crypto market. What’s planned?
Bitcoin fell from a price of more than 48,000 euros in March to below 20,000. The trend continues to decline. The recent price caps show how risky and speculative cryptocurrencies are. That’s another reason to finally regulate them, says CSU MP Markus Ferber. This would also facilitate the fight against money laundering. It is “basically about payments involving a crypto service provider,” says the spokesperson for economic policy for the EPP Group in the European Parliament. “Transactions from private individuals are not registered,” emphasizes Ferber. “With the agreement, similar rules apply to crypto transactions in the field of anti-money laundering as we already know them in other areas of the financial sector. I therefore consider these requirements to be strict, but reasonably proportionate.” Ferber is referring to the set of rules called “Markets in Crypto Assets” that representatives of the EU parliament and EU member states agreed on June 30.
Matthew Reiche
ARD Studio Brussels
Data collection for all transactions
In the future, digital money trading platforms should determine sender and receiver information for all transactions and, if necessary, forward them to the responsible authorities. Martin Schirdewan agrees that this is long overdue. Because the crypto market is a money laundering paradise, says the new chairman of the Left Party and group leader in the EU parliament.
“For example, an estimated one in four Bitcoin investors has a criminal background. There are drug cartels, terror is financed, arms dealers and people smugglers whitewash their black money,” says Schirdewan. “That’s why it’s good that stricter transparency rules now help put an end to this money laundering and make it more difficult for criminals to launder and stop money.”
Skepticism in the Pirate Party
According to Patrick Breyer, MEP, criminal prosecution is already possible on the basis of the applicable regulations. Those who do not keep their crypto assets with an official service provider will appear in the future as a code made up of numbers and letters. Direct transfers between cross-platform crypto exchanges remain just as difficult to monitor.
However, the Pirate Party MEP is convinced that the rules agreed between the EU parliament and member states are not about fighting crime. “The stated goal of wanting to fight money laundering and terrorism is just an excuse to take more and more control over our financial privacy, private affairs,” says Breyer. Anonymous payments should be banned.
He is convinced that this would take away people’s financial freedom. “Opposition members such as Alexei Navalny in Russia, for example, increasingly rely on anonymous donations in such virtual currencies to continue their work at all. We should all have the right to pay online and donate without all our payments being personal to be recorded.”
New rules are expected to apply from 2023
The new regulations should come into force in the EU at the end of 2023. The provisional agreement still needs to be approved by the relevant committees and Parliament’s plenary, as well as by the representatives of the member states. But that is considered a formality.
EU Regulatory Framework for the Crypto Market – “Markets in Crypto Assets” (MiCA)
Representatives of the EU parliament and EU countries have agreed on a set of rules called Markets in Crypto Assets (MiCA) to regulate the crypto market. It provides, inter alia, for the following provisions:
License required for crypto companies
Companies wishing to issue and sell cryptocurrencies in the EU need a license from a supervisory authority in an EU country. This license allows the companies to serve their customers in all 27 member countries. The supervisory authorities of the countries must report any major operator they have authorized to the European Financial Markets Authority ESMA.
Traceability of transfers
The EU wants to be able to track crypto transfers. In the future, crypto platforms will therefore have to determine information about senders and recipients when processing transactions. It does not matter how high the amount transferred is. In the event of an investigation into money laundering or terrorism, providers must pass on the information to the relevant authorities. The EU focuses on where bitcoin, ether and other digital currencies are exchanged for traditional money such as euros or US dollars. Therefore, direct transfers between holders of cross-platform crypto wallets are omitted.
stable coins
The new EU rules aim to give stablecoin holders the right to claim their money back for free. Issuers must maintain a minimum level of liquidity. They are also controlled by the European banking authority EBA. Crypto companies must have a registered office in the EU to issue stablecoins. Restrictions will apply to stablecoins pegged to non-European currencies.
Non-fungible Tokens (NFT)
MEPs also wanted Non-Fungible Tokens (NFTs) to be included in the regulations. But the EU countries were against it. A compromise now means that regulators on such NFTs – a type of proof of ownership for digital objects – can only require crypto regulatory compliance under very specific conditions. If they behave like traditional securities, EU financial market MiFID rules may apply. The European Commission wants to investigate within 18 months whether separate regulations for NFTs are necessary.
requirements for climate protection
Given the high energy consumption associated with cyber-currencies such as Bitcoin, crypto companies must disclose the impact of their cyber-currencies on the environment and climate change. Standards will be used that will be drawn up by the European Financial Markets Authority ESMA. The European Commission wants to evaluate the environmental impact of cryptoassets within two years and introduce binding sustainability rules. This should also apply to the energy-intensive systems used to mine cryptocurrencies.
EU wants to curb crypto market
Matthias Reiche, MDR Brussels, 11.7.2022 13:27 hrs