The European Parliament recently announced that it endorsed new rules that would enable crypto-asset transfers to be traced in the same way as traditional money transfers. The EU recently approved two new initiatives aimed at increasing transparency in crypto-asset transactions. First, the Parliament endorsed new text for the EU’s “travel rule,” a rule already used for traditional money transfers, that would enable crypto transfers to be traced and suspicious transactions blocked. On April 20, 2023, the Parliament voted to include text, which was provisionally agreed upon by the Parliament and Council of the EU in June 2022, enabling the “travel rule” to cover crypto transfers and require crypto exchanges to collect source and beneficiary information for the crypto asset that will “travel” with the transaction and be stored on both sides of the transfer. The new law would cover transactions over €1,000 between private “self-hosted” crypto-asset wallets and hosted wallets managed by crypto-assets service providers. However, the Parliament indicated that person-to-person transfers conducted without a provider or among providers acting on their own behalf would not be covered.
Second, the European Parliament announced that it approved a new comprehensive legal framework, also known as MiCA or Markets in Crypto Act, that would cover all crypto-assets that are not regulated by existing financial services legislation. MiCA was developed to enhance market integrity and financial stability in the EU by enabling EU consumers to be better informed of the risks, costs, and charges associated with crypto operations. According to the Parliament, the draft law, which the Parliament and Council informally agreed upon in June 2022, will regulate public offers of crypto-assets and address the transparency, disclosure, authorization, and supervision of crypto transactions. It will also include measures to prevent market manipulation, money laundering, terrorist financing, and other criminal activities and offer consumer protection and environmental safeguards for crypto-assets.
With regards to next steps, the Parliament reports that the texts of the laws must be formally endorsed by the Council before they can be published in the EU Official Journal. Twenty days after the endorsement, they will enter into force.