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EU exchanges will be forced to store the data of Cryptocurrency holders.
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Several cryptocurrency platforms are asking customers for information about their wallets.
This December 30, the Regulation for the Cryptoasset Market (MiCA) comes into force in the European Union (EU). It is expected that from that date a series of new regulations will regulate the operation of cryptocurrency platforms in the region, following the changes that are already being implemented with the application of the first phase of the law, focused on stablecoins.
Along with MiCA, the so-called “travel rule” also comes into force through the new Transfer of Funds Regulation (TFR). It consists of a group of recommendations proposed by the Financial Action Task Force (FATF) since 2019 as a way to counter money laundering and terrorist financing (AML/CFT). They were updated in June 2022 and reviewed in the plenary session that concluded on June 23, 2023.
Now will be mandatory in the EU, following the guidelines of the European Banking Authority (EBA). This means that exchanges must store their customers’ data and track their movements with cryptocurrencies. They will have to share that information when the authorities require itas long as the transactions exceed 1,000 euros. Companies will also be responsible for compliance when using third-party providers.
As reported by CriptoNoticias, the exchanges – legally identified as service providers or CASPs – Bitcoin-criptomonedas-lavado-dinero/” target=”_blank” rel=”noreferrer noopener”>will have to identify whether the transactions are related to the purchase of goods, legal services and monitor cross-border movements with which they are linked. This is in order to detect any activity that may seem illegal.
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This is a situation that has been repeatedly questioned by the bitcoiner community, concerned about the impact of this regulation on privacy. A debate that is resumed now, when There are only 13 days left until the regulations come into force.
Tuur Demeester, an economist and bitcoiner who go to travel rule and MiCA as “a trap” that will place European users in a vulnerable situation.
The investor also shares an image that indicates the information that will be taken into account and the steps that will be followed to share it.
These are personal data that cryptocurrency exchanges in Europe have already been requesting, but now with the TFR they have the addition of cryptoasset transfers handled through a CASP (initiated, received by, or transferred through) must be accompanied of the identification of the originator and the beneficiary.
That is why beyond of the usual KYC (“know your customer” policy) exchanges will require the following data:
- Full name.
- Associated wallet.
- Identifier or account.
- “Additional” information about the funds.
The idea is that both the platform and the authorities can determine whose cryptocurrency address is and its relationship with the recipient. A process exemplified by a curious tweet from the analyst and investor identified in X as O. R:
– From (YOU):
Name: Nayib Bukele
Address: Presidential House, San Salvador, El Salvador.
Account ID: #123456
– For (Your friend)
Name: Javier Milei
Address: Casa Rosada, Buenos Aires, Argentina.
Account ID: #654321
And if they doubt they can ask you for more. pic.twitter.com/0uGjcNqp08
— OR (@ORamosBets) December 16, 2024
Hence the fears that MiCA generates and the repeated recommendations to resort to self-custodytaking into account the importance that privacy has for bitcoiners. A situation that Demeester and OR highlight, pointing out the dangers to which users are exposed.
This, beyond being “pretty,” represents a danger and a direct attack on the privacy and security of cryptocurrency users, because any criminal gang that has access to that data will know who they have, how much they have, where they live, what their name is, and What pants are you wearing today?
OR, cryptocurrency analyst and investor.
Exchanges have two months for the transition
Once the TFR comes into force at the end of the year, cryptocurrency platforms will have a period of two months to declare their adherence to the new requirements. The period will be 6 months in the case of MiCA. These are times of transition seek to facilitate adaptation to standards.
So far, the majority of exchanges operating in Europe they have not defined the adaptation process. Some users, who comment on the OR thread, in X say that they have received messages from platforms such as OKX and Revolut alerting about the travel rule. Based on this, they are requesting information about the properties of the wallets.
According to the information available, the exchanges are still in the process of adapting its infrastructure for compliance of these demands, which implies the installation of more specialized software and tools. This has put many companies under financial pressure, ABE acknowledges.
“It is expected that the benefits of these guidelines outweigh the potential costs, and that these guidelines will contribute to making the fight against AML/CFT more effective,” the agency said last July.
It must be taken into account that this regulation comes into force together with the second block of MiCAaimed at the regulation of service providers with cryptoassets. A situation that requires compliance with more requirements, including the application for a license in one of the 27 EU countries to be able to continue operating in the region.
However, several unions in the eurozone report delays. They ask an extension for the entry into force of the law, Well, a large number of EU countries have not made progress in transposing their laws to MiCA.
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