On 9 February 2022, the European Parliament’s Economic and Monetary Affairs (ECON) and Civil Liberties, Justice and Home Affairs (LIBE) committees published their joint draft report on the European Commission’s July 2021 proposal for a regulation on information accompanying transfers of funds and certain crypto-assets (the so called “travel rule” regulation). The draft report, prepared by co-rapporteurs Ernest Urtasun (Greens, ECON) and Assita Kanko (ECR, LIBE), propose 80 amendments to the Commission’s proposal, including the:
- Removal of the de-minimis value exemption included in the Commission’s proposal, which provided that transfers of crypto-assets not exceeding EUR 1,000 that do not appear to be linked to other transfers of crypto-assets which, together with the transfer in question, exceed EUR 1,000, could be subject to less stringent requirements.
- Expansion of the scope of the proposed regulation to cover transfers of crypto-assets executed by means of kiosks connected to a distributed ledger network known as crypto-asset automated teller machines (“cryptoATMs”).
- Clarification that the proposed regulation applies to transfers from or to crypto-asset wallets based on a software or hardware not hosted by a third party, i.e. “unhosted wallets”, provided that a crypto-asset service provider or another obliged entity is involved.
- Clarification that the proposed regulation should not apply if both the originator and the beneficiary are crypto-asset service providers acting on their own behalf or the transfers constitute person-to-person transfers of crypto-assets carried out without the involvement of a cryptoasset service provider or obliged entity.
- Requirement that crypto-asset services providers obtain information on the source and destination of crypto-assets involved in a transfer (“know-your-transaction”).
- Requirement that information accompanying transfers of crypto-assets must be submitted in a secure manner and immediately with the transfer of crypto-assets, subject to several conditions, including: the crypto-asset service provider of the beneficiary is a regulated entity established within the EU or the crypto-asset service provider of the beneficiary is established in a third country and is able to receive and retain the information required under the regulation and applies adequate safeguards for ensuring data protection.
- Prohibition of transfers involving non-compliant crypto-asset service providers.
Members of both the ECON and LIBE committees will be able to submit further amendments, prior to the formal adoption of the European Parliament’s position.
In the Council, negotiations between Member States progressed swiftly under the former Slovenian Presidency, with a general approach adopted already in December 2021. Akin to the European Parliament’s co-rapporteurs, Member States also proposed to remove the de-minimis value exemption for information concerning transfers of crypto-assets.