almost all of your cryptocurrency transactions will soon be monitored

Travel Rule : presque toutes vos transactions en cryptomonnaies seront bientôt surveillées

In parallel with the MiCA regulation, the Council of the European Union also adopted the Transfer of Funds Regulation (TFR), a set of texts that aims to dramatically strengthen the monitoring of cryptocurrency flows between digital asset service providers. What will change in your daily life once these measures come into effect?

The TFR is about to enter into force in the European Union

won’t run away from you The European Union is making great strides in creating a regulatory framework for the cryptocurrency ecosystem.

In parallel with the approval of the MiCA regulation by the Council of the European Union, the latter also approved another aspect of the regulation: Regulation on the transfer of funds (SCR).

💡 Before learning about the TFR measures, find the main measures of the MiCA regulation, which will come into force in 2024.

As with MiCA, The TFR still needs to be approved by the European Parliament on October 10, but the result of the vote is already known, because the TFR was the subject of a political agreement between the interested institutions last June. After this vote, the TFR will be entrusted to lawyers and linguists for publication in the Official Journal of the European Union.

The TFR provisions will then enter into force in 2024, 18 months after their publication in the Official Journal.

What changes did the TFR make?

in Money transfer regulation rhymes with arrival of cryptocurrency travel rules. The travel rule is a regulation recommended by the Financial Action Task Force (FATF) which obliges the concerned actors to – Crypto asset service provider (CASP), equivalent to PSAN in French, to share information about their customers for certain transfers.

This rule was designed to combat money laundering and terrorist financing (LCB-FT). The travel rule would also allow businesses to report suspicious activity and authorities to demand details of transactions.

Let’s look at this in more detail with the 3 situations presented by TFR.

Rule of movement between CASPs

In the context of the application of the Travel Regulations, the biggest challenge for CASPs and their users is that the rule applies regardless of the transfer amount. So even if you only transfer €5 in Bitcoin (BTC) from one platform to another, the Travel Rule will apply.

This means that the CASP customer must provide your full name, destination wallet, your account number, your postal address, your identification number (ID card or passport) or date and place of birth with the transaction.

On the part of the CASP beneficiary of the transaction, the latter must transmit your first and last name, your address and your account number.

To comply with travel regulations, solutions such as VerifyVASP (UpBit and Chainalysis) or TRUST (Coinbase) already exist. These entities represent conglomerates of players who have developed solutions to easily share their customers’ data within travel regulations.

The rule of movement between CASP and own wallet

For transfers from CASP to your own wallet (i.e. all wallets where the user has a private key), The travel rule will apply from a threshold set at €1,000.

Initially, all transfers between CASP and a self-hosted wallet were affected by the travel rule. So this is a small victory for the ecosystem.

Solutions such as Sismo and Anima Protocol are being considered to comply with the Travel Rules in such a situation.

The rule of movement between own wallets

Among all these provisions, it is worth noting that the Travel Rule will not apply to an exchange between 2 self-hosted wallets. For example, a transaction made between 2 MetaMask wallets will not be subject to the Travel Rule.

What about GDPR?

Regarding the GDPR (General Data Protection Regulation), CASPs must comply with its provisions when applying the travel rules. On this topic, Adan adds:

“A CASP may block a transfer if it believes that another CASP is not GDPR compliant or does not have sufficient security measures in place [pour contrer les hacks ; NDLR]. »

We thank Adan (Association for Digital Asset Development) for answering our questions about TFR.

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Source: Document published by the Council of the European Union

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