European Union will extend the decades-old monitoring of financial transactions in traditional finance to Cryptocurrencies. This follows the passing of a new bill by the European Union parliament that seeks to trace the transfer of digital assets to users. The new regulation will address the criticism against digital assets regarding financing illegal activities.
The new EU bill indicates that the European economic zone is on course to adopting a series of policies to regulate the Crypto space. Recently, the European Central Bank president Christine Lagarde expressed her concerns regarding the meteoric rise of Crypto adoption. To manage the risks, the EU issued a timeline of rolling out a unified Crypto policy by 2024.
The New Rule Affects CASPs
According to the official communique, the bill focuses on Crypto-assets service providers (CASPs). Going forward, they will be required to embed the source of a Crypto asset and its beneficiaries in the Crypto time stamp. Further, they should encrypt the information on “both sides of the transfer” for anyone on a public network to see.
The EU aims to ensure that the CASPs can avail the information on Cryptocurrency transactions to an investigative entity on demand. The goal is to thwart terrorism financing and money laundering that support illicit activities.
The bill does not define the limit of Crypto transfers that need to be reported. Instead, the government should monitor every transaction. However, when the P2P transfer is to an unhosted wallet, the CASP must verify that the beneficiary is the real owner for transfers worth 1000 Euros and above.
CASPs Are Skeptical About the Outcomes of The Bill
Crypto-assets service providers such as Coinbase are not enthusiastic about the new rule. Coinbase argues that most transactions are of low value in the wave of new adoptions. Therefore, monitoring them is uneconomical or feasible. Further, the CASPs oppose the bill since it will amount to an infringement of privacy rights that Cryptos was designed to uphold.
The law-making process has addressed the privacy issue. The negotiators embedded a provision stating that the information should be concealed if there is no guarantee that the name and crypto address will not be protected.
The Buyer’s Market Persists
In the meantime, the Crypto market is in the red, and Bitcoin is trading below its support level of $20,000. On the other hand, Ethereum is steadily above its $1,000 level of support after registering a strong rebound in the last seven days.
The market capitalization has shed over $100 billion on Monday alone, indicating that the Crypto winter is gathering momentum.
The bear cycle has no connection to the EU Crypto bill. The Crypto market has matured and is resilient to one-off shocks.