The European Parliament May Tighten the Rules on DeFi Wallets

The Committee on Economic and Monetary Affairs of the European Parliament (ECON) will vote on March 31 to introduce amendments to the regulation on the exchange of information between counterparties when transferring funds, after which it will become mandatory to collect data on users of non-custodial cryptocurrency wallets.

According to Unstoppable Finance development manager Patrick Hansen, this measure is being introduced as part of the implementation of one of the FATF rules.

Following the adoption of the amendments, digital asset service providers such as exchanges and custodial services will be required to exchange information about their customers when conducting transactions.

Hansen emphasized that the bill tightens the rules for collecting and exchanging data when conducting transactions with non-custodial wallets. Now you will need to check the accuracy of the information regarding the initiator and beneficiary behind the non-hosted wallet.

He added that digital asset service providers cannot physically verify a non-custodial counterparty. Therefore, most likely, cryptocurrency companies will simply refuse transactions with such services in order to comply with regulatory requirements.

Hansen noted that the draft bill also provides for the possibility of introducing “additional special measures to reduce the risks associated with transactions to/from non-hosted wallets, including the introduction of potential restrictions” a year after the law enters into force. This will allow the European Commission to completely ban transactions using non-hosted wallets.

Among other things, the document involves the exchange of information about all cryptocurrency transactions, regardless of their volume. At the same time, there is a minimum threshold of €1,000 for fiat currency.

If approved by ECON, the bill will be submitted to the European Commission and the Council of the EU. Significant changes may be made to the document before final adoption.

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