The European Union has taken a step further to make crypto transactions traceable, just like fiat currencies, to prevent illegal assets movement.
There seem to be no regulations guiding trading cryptocurrencies like Bitcoin and other digital tokens from all indications. Members of the EU Parliament are at the forefront of the move to engage specialists to monitor crypto transactions to prevent wrongdoings.
As announced by the EU, MPs have taken the lead by instructing the body overseeing all banking operations in Europe, the European Banking Authority (EBA). The EBA is to outline the list of crypto firms alleged to evade tax and engage in illicit financial transactions and other related offenses.
EU’s Latest Rule an Overwhelming Vote
Based on the unanimous vote cast by the majority of the EU Parliament members, the decision to crack down on unhosted digital token wallets has been ratified. Consequently, crypto trading platforms undertake a know-your-customer (KYC) registration before any trading activities can be allowed.
The EU Parliament wants the EBA to create a public register featuring crypto service providers suspected of having engaged in illegalities to remind the public about doing business with them and set the stage for further sanctions of erring offenders.
Before engaging in any transactions with clients, firms must establish the purpose of the marketing by asking the customer’s details of the recipient of the funds and other vital data.
According to Ernest Urtasun, a co-member of the EU’s Committee on Economic and Monetary Affairs, the new rule came at the right time by the ongoing illegal financial dealings in the industry. This will be checkmated once the regulations go into effect.
There has been a rise in the illegal crypto-related transactions a Ross the EU with little to no regulations to checkmate the activities because it is difficult to trace due to the anonymity of users in the exchange platforms.
New Changes to Complement Existing Privacy Regulations
Crypto transactions have been identified as the most significant enabler of tax evasion by individuals and businesses worldwide. Due to the absence of adequate laws and anonymous identities in digital financial assets transactions, illegal tax evasion has increased, coupled with tax havens like Panama.
With the new guidelines coming into effect, the EU has the right approach to plug the loopholes to make it difficult for entities to move an inch regarding unlawful financial actions.
However, the CEO of Coinbase, Brian Armstrong, believes that the new law has set the EU to be loggerhead with the rest of the crypto industry because the governing body failed to distinguish between crypto and fiat in its latest move.
The CEO added that the EU acted on impulse and failed to see the need for a unique approach to the issue involving crypto transactions. The new regulation does not consider the peculiarities of the industry.
Armstrong further noted that the new law is discriminatory and does not work in favor of the industry going by the requirements put in place.