Legislative debate: Crypto-over-regulation warning: Federal government rejects EU crypto-reporting obligation for unhosted wallets | news

The EU wants to enforce reporting requirements for non-hosted wallets
The German government fears significant placement disadvantages for Europe’s DeFin industry
Due to many concerns, EU negotiations have stalled

In the last few weeks, the EU has been working on the cornerstones of a TFR Regulation. The Federal Government is now showing dissatisfaction with the far-reaching rules, which may have the opposite of the actually positive consequences. What are the government’s criticisms directed at?

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The EU wants to introduce reporting requirements for transactions with non-hosted wallets

The EU wants to introduce a reporting requirement for crypto-transactions that take place using unhosted wallets (also known as self-custody wallets in crypto-jargon). This aims to counter the financing of terrorism and money laundering using Bitcoin, Ether and Co. Initially, crypto service providers should report all transactions above a threshold of € 1,000 to the appropriate authority. According to information from “BTC-ECHO”, this threshold has also fallen recently, making every transaction with an unhosted wallet reportable. In this case, CASPs (Crypto Assets Service Providers) will also be required to verify the identity of the transaction partners. Experts fear that such verification will result in a high concentration of sensitive customer data. Due to these and other concerns, the TFR negotiations between the European Commission, the European Parliament and the Member States have recently stalled.

The Federal Government criticizes the EU bill

The German Federal Government is also extremely skeptical of the proposed EU legislation. At the request of the FDP spokesman for blockchain and fintech innovation, Frank Schffler, the Parliamentary Secretary of State for the Federal Ministry of Finance, Florian Toncar, responded as follows: accordingly in the negotiations. ” The proposal represents a “regulatory hurdle” that could trigger “an evasive move toward comprehensive anonymity,” Toncar continued. In other words, the EU could open a Pandora’s box: Over-regulation can have the opposite effect and even increase criminal, anonymous activity. Because of these concerns, Parliament’s demands are “difficult to reconcile” with the Council’s position.

Schffler: Europe must not become “crypto Wallachia”.

The crypto industry supports the domestic government plan. Schffler also welcomes the initiative of the Federal Ministry of Finance, which is led by his party colleague Christian Lindner (FDP). Schffler attaches great importance to the German objection: “I am glad that the Federal Government is against the nonsense in the original draft regulation on the transfer of funds. Now I hope that the Federal Government will win in the Council and ultimately also in the trilogue.” in order not to let Europe become the crypto-Wallachia and to continue to enable new DeFi projects “,” BTC-ECHO “quotes Schffler’s statement.

The FDP politician is not alone in his criticism: Many crypto-experts fear that Europe as a DeFi location will be permanently damaged as a result of a restriction or ban on the use of non-hosted wallets. For example, Robert Kopitsch of the “Blockchain for Europe” association told “BTC-ECHO” the importance of averting the ban: “If there is a ban, there will be no Web3 industry and decentralized identity in Europe that would give citizens a chance to manage their data themselves Eventually, Europe would miss out on the next technological development, which is why this point is so relevant. ”

Editing finanzen.net

Image Sources: Dim Dimich / Shutterstock.com, Igor Batrakov / Shutterstock.com

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