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European lawmakers back new tracing rule for crypto transfers

European Union lawmakers on Thursday backed new safeguards for tracing transfers of bitcoin and other cryptocurrencies, in the latest sign that regulators are tightening up on the freewheeling sector.

Two European Parliament committees jointly voted 93 in favor and 14 against on cross-party compromises that crypto exchange Coinbase Global Inc said would usher in a surveillance regime that stifles innovation.

The $2.1 trillion crypto sector is still subject to uneven regulation across the globe.

Under the bill first introduced last year by the EU’s executive European Commission, crypto businesses such as exchanges would have to obtain, retain and submit information about those involved in transfers.

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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.

Currently, there are no EU requirements for tracing crypto transfers and the Commission had proposed to apply the new rule to transfers worth 1,000 euros ($1,116) or more, but lawmakers voted on Thursday to remove the “de minimis” threshold, meaning all transfers would be within reach.

Urtasun said removing the threshold brought the bill into line with the Global Financial Action Task Force rules that set standards to combat money laundering. These rules mean that crypto firms must collect and share transaction data.

Lawmakers’ commissions also backed setting up transfers from “unhosted” crypto wallets held by individuals, not exchanges, under the trace rule, and on listing by the Banking Authority European Union 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 draft law and representatives from both sides will now meet to agree on a final version. Countries have already agreed among themselves that there should be no de minimis.

($1 = 0.8961 euros)

First post: STI

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