The warnings came and this week the European Parliament agreed to implement this measure. In an effort to “end money laundering”, Europe wants cryptocurrency transactions to be traceable to their senders and recipients. Namely, ending anonymity in cryptocurrencies.

Mandatory to identify who is behind cryptocurrencies. The parliament’s agreement represents the first step for future European regulations seeking to regulate cryptocurrencies. This week we have Funds Transfer Regulation (TFR) reform that will force exchanges like Binance or Coinbase to identify who is behind every move.

Stock markets are closer to banks. Cryptocurrencies, by their very nature, allow anonymous transactions without difficulty. With this reform, obligations equivalent to those that banks already have by wire transfers will be added.

Banks currently have financial obligations to users. Europe wants exchanges, platforms where cryptocurrencies are frequently traded, to have similar liability requirements. A set of regulations that some major exchanges have already complied with, although European regulations do not yet require them.

There will be no minimum. One of the internal discussions to run this agreement was to know the minimum euro equivalent that people’s information should be required. For banks this is a transfer of more than 1,000 euros, but this will not happen with cryptocurrencies. Because it’s so easy to split them up, the TFR reform reveals that all movements, no matter how much, must be reported. This does not mean that the sender and receiver are known for all cryptocurrency transactions. But this is how it should be in these transactions made on major stock exchange platforms.

Ernest UrtaunThe MEP, from the Green group and leading the negotiations for this measure, explains that “scams and hacks against investors of crypto products are becoming more frequent in the industry.” This reform will be accompanied by a “black list of platforms with abusive practices”, and platforms will be monitored for “compliance with data protection regulations”.

7/11Valid for transfers over 1000€ in banks. For crypto, it will be done with all transfers as it is easier to split them. The rules will not apply to cryptocurrency transfers between persons with no platform involved.

— Ernest Urtasun (@ernesturtasun) 30 June 2022

Won’t apply to private wallets. The anonymization of cryptocurrencies seems like a direct attack on their concept, but the legislation doesn’t go that far. The European Parliament finally decided that these obligations only apply to exchanges, not “non-hosted wallets”. That is, it will not apply to private wallets where users privately manage their cryptocurrencies.

Laying the foundations for future Cryptoactive Market Regulation. This agreement can be understood as a measure that will form part of the future Regulation for the Crypto-Asset Market or MiCA (Markets in Crypto-Assets in English). This legal framework is in the process of being adopted and will soon be voted on in the European Parliament.