Handling Bitcoin & Co .: How the EU Regulates the Crypto Market

Status: 07/12/2022 08:06

Cryptocurrencies such as Bitcoin, Ethereum or Solana are increasingly being used for money laundering. The EU is now addressing this by being the first major economic region to regulate the crypto market. What is planned?

By Matthias Reiche, ARD Studio Brussels

Bitcoin fell from a price of over 48,000 euros in March to less than 20,000. The trend continues to decline. The latest price caps show how risky and speculative cryptocurrencies are. That is another reason to finally regulate them, says CSU MP Markus Ferber. This would also make it easier to combat money laundering. It is “essentially about payments involving a crypto-service provider,” said the economic policy spokesman for the EPP group in the European Parliament. “Private individuals’ transactions are not recorded,” Ferber emphasizes. “With the agreement, comparable rules apply to cryptocurrencies in the fight against money laundering, as we already know them in other areas of the financial sector. I therefore consider these requirements to be strict but rather proportionate.” Ferber refers to the set of rules called “Markets in Crypto Assets”, which representatives of the European Parliament and the EU Member States agreed on 30 June.

Data collection for all transactions

In future, digital money trading platforms should define sender and recipient information for all transactions and, if necessary, forward them to the responsible authorities. Martin Schirdewan agrees that it is a long wait. For the crypto market is a money laundering paradise, says the new chairman of the Liberal Party and group leader in the European Parliament.

“An estimated one in four Bitcoin investors, for example, has a criminal background. There are drug cartels, terrorism financed, arms dealers and human traffickers laundering their dirty money,” Schirdewan said. “Therefore, it is good that stronger transparency rules are now helping to put an end to this money laundering and make it harder for criminals to launder money and put an end to it.”

Skepticism among the Pirate Party

According to Patrick Breyer, Member of the European Parliament, criminal prosecution has already been possible on the basis of the rules in force. Those who do not keep their crypto assets with an official service provider will continue to appear as a code consisting of numbers and letters in the future. Direct transfers between platform-independent crypto exchanges remain just as difficult to control.

However, the MEP from the Pirate Party is convinced that the set of rules agreed by the European Parliament and the member states is not about fighting crime. “The stated goal of wanting to combat money laundering and terrorism is just an excuse to gain more and more control over our economic privacy, private business,” Breyer said. Anonymous payments should be banned.

He is convinced that it would remove the economic freedom of the people. “For example, opposition figures like Alexei Navalny in Russia are increasingly dependent on anonymous donations in such virtual currencies to continue their work at all. We should all have the right to pay and donate online without all our payments being personal. registered. “

New rules are expected to apply from 2023

The new rules must enter into force in the EU before the end of 2023. The preliminary agreement remains to be approved by the relevant committees and Parliament’s plenary session, as well as the representatives of the Member States. But it is considered a formality.

EU regulatory framework for the crypto market – “Markets in Crypto Assets” (MiCA)

Representatives of the European Parliament and the EU countries have agreed on a set of rules called Markets in Crypto Assets (MiCA) to regulate the crypto market. It contains, inter alia, the following provisions:

License required for crypto companies

Companies wishing to issue and sell cryptocurrencies in the EU must have a license from a supervisory authority in an EU country. With this license, companies can serve their customers in all 27 member countries. Countries’ supervisors must report to the European Financial Markets Authority ESMA all major operators that they have approved.

Traceability of transfers

The EU wants to be able to track crypto transfers. In the future, therefore, cryptocurrency platforms will need to establish information about senders and recipients when processing transactions. It does not matter how high the amount transferred is. In the event of an investigation of money laundering or terrorism, providers must pass on the information to the relevant authorities. The EU focuses on where bitcoin, ether and other digital currencies are exchanged for traditional currencies such as the euro or US dollars. Therefore, direct transfers between holders of cross-platform crypto wallets are omitted.


The new EU rules aim to give stablecoin holders the right to claim their money back for free. Issuers must maintain a minimum level of liquidity. They are also monitored by the European Banking Authority EBA. Cryptocurrencies must have a registered office in the EU to issue stack coins. There will be restrictions on stack coins linked to non-European currencies.

Non-fungible tokens (NFT)

MEPs also wanted non-fungible tokens (NFTs) to be included in the regulation. But EU countries were against it. A compromise now stipulates that supervisors of such NFTs – a kind of proof of ownership of digital objects – can only require compliance with cryptographic rules under very specific conditions. Should they behave like traditional securities, EU MiFID financial market rules may apply. The European Commission intends to investigate within 18 months whether separate rules are necessary for NFTs.

requirements for climate protection

In view of the high energy consumption associated with cyber currencies like Bitcoin, crypto companies need to disclose the impact of their cyber currencies on the environment and climate change. Standards will be applied, which will be developed by the European Financial Markets Authority ESMA. The European Commission wants to evaluate the environmental impact of cryptocurrencies within two years and introduce binding sustainability rules. This should also apply to the energy-intensive systems used to extract cryptocurrencies.

The EU wants to put the crypto market on hold

Matthias Reiche, MDR Brussels, 11.7.2022 13:27

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