Cryptocurrencies are still relatively new to the market and as such their regulation by regulators is not very advanced. But now the EU Parliament is intervening and wants to take a closer look at so-called “unhosted wallets”.
The interest in cryptocurrencies as an investment is constantly increasing. Of course, this is always accompanied by increased interest on the part of the regulatory authorities.
So-called “unhosted wallets” are now also feeling the effects of this, which the EU Parliament wants to restrict more in the future.
What are cryptocurrency unhosted wallets?
With the wallet, users can manage their cryptocurrencies. However, the wallet is not to be understood as an actual purse.
Rather, it is used to store private and public keys that ensure access to Bitcoin, Ethereum and Co.
Wallets are also divided into two different categories: the „Hosted Wallets“ und die „Unhosted Wallets“.
The “Unhosted Wallets” are private wallets. Unlike the “hosted wallets”, there is no state-certified financial service provider in the background.
The users of “Unhosted Wallets” remain largely anonymous. But that is exactly what the new EU regulation is supposed to change.
How does the EU want to restrict “unhosted wallets”?
On Thursday, the EU Parliament introduced a new regulation to “stop illegal financial flows in the EU”.
In particular, with this new regulation, the EU wants to prevent money laundering, terrorist financing through cryptocurrencies or other criminal offenses. It should therefore be possible to “trace and identify” crypto transfers in the future.
The EU thus equates transfers of cryptocurrencies with “normal” money transfers. In the future, these transfers should also include “information about the source of the asset and the recipient”.
The EU Parliament expressly points out that this should also apply to private wallets.
Technological solutions are designed to ensure that these asset transfers can be individually identified.
With this regulation, the EU wants to ensure “that crypto transfers can be traced and suspicious transactions can be blocked”. This should then apply to all values – there will no longer be a minimum threshold.
MEPs are also calling for a public register
The innovation is also accompanied by the requirement for a public register for so-called high-risk companies. MEPs are calling for the European Banking Authority to do this.
In it, the authority should list companies and services that trade in cryptocurrencies and at the same time are at risk of money laundering, terrorist financing or other criminal activities.
However, before such a register can be created, the new regulation must first come into force. With the draft mandate approved on Thursday, the final version of the new law will now be negotiated with the EU governments. The European Parliament is scheduled to vote on it in April.