The European Union (EU) finally agreed on landmark anti-money laundering rules for crypto transactions Wednesday, despite industry concerns over the law harming privacy and innovation.
EU lawmakers and government representatives have been meeting over the last three months to hash out a political deal on the bill, which was introduced in July 2021 by the European Commission.
In March, lawmakers said they wanted to significantly expand the scope of the bill to include transactions with unhosted digital wallets – those which aren’t managed by a regulated service provider like a licensed crypto exchange – and to have transaction details reported to the authorities regardless of risk.
That drew a cry of protest from industry players, from lobby groups to prominent crypto firms such as Coinbase (COIN), and some legal experts said it could also be considered a disproportionate and unlawful privacy breach.
Late-stage talks on the law were being held in Brussels to find a set of rules agreeable to both the European Parliament, and the Council of the EU (which groups together the 27 member states to make collective legislative decisions). The Council is currently chaired by France. The deal was made in the nick of time, just over one day before France would have had to cede control over talks to the Czech Republic.
The deal, which sets the essential policy lines that the final law will take, still needs to be translated into legislative text and gazetted in the EU’s Official Journal.
Lawmaker Ondřej Kovařík confirmed the provisional deal in a tweet, saying that it “strikes the right balance in mitigating risks for fighting money laundering in the crypto sector without preventing innovation and overburdening businesses.”
Socialist lawmaker Paul Tang, who had pushed for tough anti-money laundering measures, said the deal meant “the verification of unhosted wallets is deeply engrained in the EU's fight against money laundering through crypto.”
“We cannot just focus on the regulated sector while keeping the backdoor open to large anonymous crypto flows,” Tang said