European Parliament Endorses Framework for Tracing Crypto Transfers

European Parliament ("EP") endorsed a "uniform legal framework" for crypto-assets in the European Union which would track transfers of crypto-assets, including bitcoins and electronic money tokens.

According to a press release published by the EP, the legislation would allow for the tracing of crypto-asset transfers and block suspicious transactions. The EP said that the "travel rule" used in traditional finance would be applied to crypto-assets by requiring information on a crypto-asset source and its beneficiary to (i) "travel" with the transaction and (ii) be held by both parties to the transfer. The legislation would cover transactions of over 1000 euros from "self-hosted wallets" when interacting with crypto-asset service providers. The EP made clear that person-to-person transfers without a provider would not be subject to the legislation.

In addition, EP approved regulations governing supervision, consumer protection and safeguards related to crypto-assets, including the crypto currency "MiCA." The draft legislation also includes measures to prevent market manipulation, money laundering and terrorist financing.

The final legislation has not yet been released. The draft legislation was provisionally agreed upon in June 2022.