The European Parliament has voted to increase regulation of cryptocurrencies. The April 19th vote saw a majority of members backing a move to provide “closer controls on virtual currencies” that will include the requirement for cryptocurrency exchanges to provide identity verification procedures.
In a Press Release, the European Parliament explained why the new regulations were designed:
“In a bid to end the anonymity associated with virtual currencies, virtual currency exchange platforms and custodian wallet providers will, like banks, have to apply customer due diligence controls, including customer verification requirements.”
Contrary to the confused and divided regulatory policies on crypto that we have seen in the past the vote was coordinated and clear. Passing with 574 votes, 13 no votes and 60 abstentions are intended to help prevent the use of cryptocurrencies in the financing of terrorism and money laundering.
In addition to requiring identity verification, MEPs voted to approve the reduction of the current €250 threshold to €150 for identifying prepaid card holders. They also agree to establish “tougher criteria” in assessing whether non-EU countries are a greater risk in terms of money laundering, and to offer protection for money laundering whistle-blowers.
Exchanges, custodian wallet providers and other businesses will be required to implement the new raft of due diligence procedures and in future will have to be registered to offer exchange and payment services.
MEP and co-rapporteur Judith Sargentini lauded the new measures as a positive move forward for the EU and the wider world:
“Annually, we lose billions of euros to money laundering, terrorism financing, tax evasion and avoidance -- money that should go to fund our hospitals, schools and infrastructure…These rules will also be of enormous benefit to developing countries and their fight against illicit outflows of money which is desperately needed for investment in their own societies.”
The new laws will be adopted from three days after publication in the Official Journal of the European Union – after which member states will have 18 months to incorporate the rules into national law.