September 27, 2022

The European Parliament will vote for mandatory verification of users of DeFi wallets

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On March 31, the Committee on Economic and Monetary Affairs of the European Parliament (ECON) will vote on amendments to the regulation on the exchange of information between counterparties when transferring funds. The proposal involves the collection of data on users of non-custodial cryptocurrency wallets, warned Unstoppable Finance development manager Patrick Hansen.

According to Hansen, the measure is aimed at implementing the FATF “road rule”. The latter obliges digital asset service providers such as exchanges and custodial services to share information about their customers when transmitting transactions.

The European Parliament is currently discussing the proposed amendments. Hansen stressed that the draft bill published by the body tightens the requirements for collecting and exchanging data when conducting transactions with non-custodial wallets.

The specialist explained that it is not physically possible for providers of services related to digital assets to verify a non-custodial counterparty. In his opinion, the bill in its current form will force cryptocurrency companies to refuse transactions with such services in order to comply with regulatory requirements.

The draft bill also provides for the possibility of introducing “additional special measures to reduce the risks associated with transfers from / to non-hosted wallets, including the introduction of potential restrictions” one year after the legislation enters into force.

Among other things, the document involves the exchange of information about all cryptocurrency transactions, regardless of their volume. At the same time, there is a minimum threshold of €1,000 for fiat currency.

If approved by ECON, the bill will be submitted to the European Commission and the Council of the EU. Significant changes may be made to the document before final adoption.

Earlier, ECON adopted a bill on the regulation of cryptocurrencies by a majority vote. The final version did not include an amendment to prohibit mining on the Proof-of-Work consensus algorithm.

Recall that in 2022, the US Treasury will return to consider the controversial FinCEN proposal, which involves mandatory verification of users of non-custodial cryptocurrency wallets.

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