EU reaches agreement on identification requirement for cryptocurrency trading

The European Parliament and the Council have reached an agreement on rules for crypto exchanges and wallet providers. They therefore fall under the rules to combat money laundering and terrorism and must be able to identify their customers.

Due to the new rules, exchanges and wallet services fall under the anti-money laundering rules, as laid down in a European directive. As a result, they are obliged to identify their customers and report suspicious activity to so-called Financial Intelligence Units. In the agreed rules, the European legislator writes that ‘terrorist groups have a certain degree of anonymity in order to transfer money into the EU financial system’.

Therefore, it would be necessary to be able to identify suspicious transactions. Later in the document, it says that “the credibility of virtual currencies will not increase if they are used for criminal activities.” As a result, anonymity would be more of a hindrance than an added value. It would also be established that extending the rules to exchanges and wallet services is not a complete solution, because many transactions also take place outside of that.

The rules also cover the anonymous use of prepaid payment cards, especially when done online. Member States may only allow this if a person uses such a card in a shop for a maximum payment of 150 euros or if there is an online payment of less than 50 euros. The European Commission reports that institutions now only have to give their formal approval, after which the rules must be transposed into national law by the Member States in 18 months. The Commission presented the regulatory plans at the beginning of last year.