With a majority vote, the European Parliament has reached an agreement to enforce closer regulation of cryptocurrencies.
A December 2017 agreement with the European Council that proposed closer regulation of cryptocurrencies to prevent their abuse in money laundering and terrorism financing has found support from EU Parliament members in a vote on Thursday, a press release revealed.
The new legislation, which seeks to completely erode the anonymity associated with cryptocurrency, exchange platforms and custodian wallet providers, passed after 574 votes for and 13 votes against with 60 abstentions.
“Criminal behavior hasn’t changed,” MEP and co-rapporteur Krisjanis Karins from Latvia said, adding:
Criminals use anonymity to launder their illicit proceeds or finance terrorism. This legislation helps address the threats to our citizens and the financial sector by allowing greater access to the information about the people behind firms and by tightening rules regulating virtual currencies and anonymous prepaid cards.
Accordingly, crypto exchange platforms and service providers “have to be registered” and will be required to apply due diligence controls for customers while adhering to customer verification requirements.
Co-rapporteur Judith Sargentini from the Netherlands claimed “billions of euros” were being lost to “money laundering, terrorism financing, tax evasion and avoidance” that should instead be going to fund schools, hospitals and infrastructure in the European Union.
With this new legislation, we introduce tougher measures, widening the duty of financial entities to undertake customer due diligence.
The updated directive, an extension of which will cover all forms of crypto exchange service providers, will be published in the European Union’s Official Journal and go into force three days after. EU member states will then have 18 months to transpose the rules into their nations’ respective laws.