Reports, intense negotiations in the corridors of the European Parliament, to finally reach a first outcome. After several months of discussions, the three European institutions which intervene in the circuit of the law (Commission, Parliament and Council of Europe) within the framework of the trialogue, managed on Thursday 29 and Friday 30 June to set a stricter framework for the regulation of crypto-assets. “An important objective of the French presidency of the EU”we welcome the Ministry of the Economy the day after the signing of the agreement in Brussels.
Among the key measures, that on the identification of all types of cryptocurrency owners, made mandatory for platforms hosting these assets in Europe, via the TFR provision (Transfert of Funds Regulation). In other words, even for small sums held, it is the end of anonymity in the universe of the blockchain. Until now, only the encrypted addresses of the digital wallets could be known, because recorded and made public on the “block chain”, but not the identity of the investor. From now on, by obliging to declare an identity, the parliamentarians intend to reduce fraud, including money laundering and “terrorist financing”, explains the Commission. Particularity of the text, portfolios not hosted online (on USB keys or other) will also have to submit to the same declarations of personal information, like the KYC of banks (Know Your Customer).
Above all, this first agreement, although provisional, marks a turning point in the vision that the Twenty-Seven intend to give to these tokens which promise a world without intermediaries. Among European parliamentarians, voices have been raised to impose on them the logic and the same regulatory framework as that used for the banking world and traditional financial assets. “When you withdraw or deposit money from a bank, everything is identified and that’s normal. The same must be true for cryptos”explained to The Tribune MEP Aurore Lalucq.
From “name and shame“
But the measure is not to the liking of players in the sector. In a letter sent in April to European finance ministers, 40 players challenged the principle of the anonymity of cryptocurrency holders. They defend users’ right to privacy, versus a model where platforms will accumulate billions of personal data that state tax authorities can potentially seize. This is what Brussels undertakes to enforce the GDPR, its regulation for the protection of personal data voted to regulate the giants of Tech.
This text, which is more restrictive, also raises questions in terms of sovereignty. What about American platforms that would have the legal means to refuse such declarations and such data transfers? And of the other players who would prefer to refrain from European approval in order to continue to guarantee the anonymity of customers?
“We will use the name and shame of those who offer services that would not be authorized in the European Union”we explain to Bercy who participated in the discussions in Brussels.
“The objective was to achieve a text capable of promoting innovation while protecting consumers”, we still object. In France, since the Pacte law came into force in 2021, crypto entrepreneurs must obtain from the AMF (Financial Markets Authorities) the “PSAN”, the status of service providers on digital assets. Also, for a French company wishing to operate in the rest of the European Union, “a simplified procedure“will then be possible, we assure the ministry.
A regulatory framework set to evolve
In fact, the European trilogue follows a recommendation from the Financial Action Task Force (FATF), formulated in 2015 which proposed to extend this KYC rule to service providers cryptoassets, for transfers from a value of 1,000 dollars.
The agreement, provisional, will however still go through new consultations in committees and in Parliament before a final vote scheduled in a few months. “It’s a framework, with evolving margins that will take into account developments in the sector in the coming years (…) in particular on NFTs (non fungible token)“, we explain to the Ministry of the Economy. “It is not a rigid frame“, it is said. The implementation should take place in 2023.
But while the wind of regulation is blowing in many states, players in the sector fear an even more brutal tightening. After MiCA (Market in crypto assets), the first European text discussed in parallel since 2020 and which defines the categories of cryptos and the TFR, what are the regulators preparing? “We are not working on Mica 2 yet“, we are assured in Bercy, in response to a suggestion made a few days earlier by Christine Lagarde, head of the European Central Bank (ECB). Faced with what some consider to be the Wild West, regulators are anyway in tune: “there can be no monetary creation without the control of the European Commission“, we summarize at the ministry in France.
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