Members of the European Parliament have approved a controversial regulation that could undermine the decentralized finance (defi) sector in the EU. Some of its provisions, which are yet to be coordinated with other European institutions, aim to introduce restrictive measures for transactions involving privately managed crypto wallets.
EU Parliament Moves to Introduce Verification for Defi Wallets
The European Parliament’s Committee on Economic and Monetary Affairs (ECON) supported on Thursday the Transfer of Funds Regulation (TFR). Among other provisions, the TFR obliges crypto service providers to apply stringent anti-money laundering measures in regards to cryptocurrency transactions, including those to and from ‘unhosted’ wallets.
A majority of the ECON members backed the text which requires crypto platforms to keep, verify, and share transaction data with financial authorities. According to a report by the German crypto news outlet BTC Echo, the procedures apply to transfers of amounts from €1,000, but a press release noted that as crypto transactions often circumvent threshold-based rules, “the MEPs decided therefore to remove minimum thresholds and exemptions for low-value transfers.”
Under the TFR, all crypto transfers will have to include information identifying the source of the assets and the recipient. The authors of the draft want to ensure that such transactions can be traced and blocked if they are deemed suspicious. However, “the rules would not apply to person-to-person transfers conducted without a provider, such as bitcoins trading platforms, or among providers acting on their own behalf,” the Parliament’s press service noted.
Furthermore, processors of crypto transactions will be able to stop transfers originating from or sent to non-compliant providers. That’s according to another provision which was supported as well. The regulation was also passed by the Civil Liberties, Justice and Home Affairs (LIBE) committee. The official announcement
