Europe's Lawmakers Set to Advance Discussion of Controversial Crypto AML Rules

Jack Schickler

Talks involving the European Union’s parliament, commission and council begin Thursday on controversial anti-money laundering rules for crypto transactions, the last stage towards the passage into law of measures that some have said could kill privacy and stifle innovation.

Many in the industry question the premise that tough new rules are needed against a tide of criminal behavior, but more pragmatic voices are looking at the legislative details that could prove crucial – such as how the law will treat small payments and unhosted wallets, as well as when the new law would take effect.

The draft legislation would require crypto providers to verify customer details and report suspicious transactions to the authorities – but the industry has complained it could prove burdensome to implement, and would end digital anonymity.

A last-minute protest led by Coinbase (COIN) and similar companies largely fell on deaf ears, and on March 31 European Parliament lawmakers voted to apply tough money-laundering rules to the sector, arguing the rules were needed to curb crime. Now, attention turns to what the final form of the law will be – where talks are reaching the closing stage.

Both lawmakers at the European Parliament and national government meeting in the EU’s Council have said they want to see tighter monitoring of which parties take part in crypto transactions. They say that should apply even for the smallest payments – unlike for conventional bank transfers where customer identity only needs to be verified for transactions over 1,000 euros ($1,066) – as it’s easier to circumvent by chopping up digital payments into small chunks.