EU implements regulations for tracing crypto transactions
The European Union (EU) has introduced measures to ensure the traceability of crypto-assets, compelling service providers to gather and disclose specific information regarding the sender and beneficiary of each transaction, irrespective of transaction size.
The new measures are aimed at curbing potential illicit activities and come as part of a package of legislative proposals to strengthen the EU's anti-money laundering and counter-terrorism financing rules.
"Under the new rules, crypto asset service providers are obliged to collect and make accessible certain information about the sender and beneficiary of the transfers of crypto assets they operate, regardless of the amount of crypto assets being transacted, to ensure the traceability of crypto-asset transfers in order to be able to better identify possible suspicious transactions and block them", the new EU rules state.
EU approves world's first comprehensive crypto regulatory regime
The EU has approved the world's first comprehensive set of regulations for crypto-assets, called the Markets in Crypto Assets (MiCA), that are set to become law by July this year.
The new regulations are putting pressure on other countries like the UK and the US to follow suit.
Read more: Belgium's digital minister says EU will 'bring order to crypto' and create its own blockchain | The Crypto Mile
The rules call for crypto firms that intend to issue, trade, and safeguard cryptoassets in the 27-member bloc to secure a license.
To curb tax evasion and money laundering via crypto transactions, the EU has also mandated the disclosure of sender and beneficiary names in crypto transactions from January 2026.
MiCA vote sees EU become attractive destination for VC funding
Venture capital (VC) funding has begun to focus on European crypto firms, as a result of the new regulations.
Read more: Meta hit with record €1.2bn fine over EU data rules
Despite the overall decrease in VC funding for crypto startups in Q1 2023, European crypto startups, especially in Zurich and Berlin, have successfully attracted funding.
France as gateway to EU crypto market
Facing increased scrutiny from the US Security Exchange Commission (SEC), US crypto firms are considering a move across the Atlantic, where European countries, particularly France, present a clearer regulatory landscape.
Presently, crypto platforms in France are allowed to operate without a full license until 2026, offering services with limited scrutiny.
Nevertheless, come January 2024, these companies will be required to obtain a full license to continue operations, a stipulation set to be enforced even before the implementation of the European Union's MiCA regulations.
Read more: Bitcoin conference attendance plummets by 50% as crypto gloom persists
Coinbase's (COIN) Brian Armstrong and Ripple's Brad Garlinghouse cite the US's ambiguous regulations as a deterrent for crypto innovation within the country.
France is actively inviting American companies, promising a clear framework through its upcoming CASP regime that aligns with European regulations, offering international firms access to the broader European market.
With companies like Circle, Binance, Crypto.com, eToro, and Digital Currency Group’s Luno already registering with French authorities, the country is poised to become a European crypto hub.
Watch: Japan vies to be 'number one again through web3 innovation' | The Crypto Mile
Download the Yahoo Finance app, available for Apple and Android.