Europe’s crypto regulations moves one step closer to vote – removes proof of work ban from proposal

• The European Parliament submitted a policy document to regulate crypto on March 7.
• The EU is seeking to apply existing money laundering regulations to crypto transactions as well.
• The EU isn’t the only sovereign that has raised such concerns.

The European Parliament, which has been at the forefront of technology regulations worldwide, is getting ready to pass what could be a landmark regulation on crypto. On February 7, the Parliament submitted a policy blueprint which aims to curb money laundering and terror financing through cryptocurrencies.

The policy document was led by Assita Kanko, a member of parliament from Belgium and Ernest Urtasun, a member of Parliament from Spain. It seeks to apply the EU’s current regulations on money laundering etc. on crypto transactions. Amongst these is the “travel rule” which requires banks and payment service providers to store information travelling between EU countries and make it available to relevant authorities. At the moment, this rule is applicable to transactions worth €1000 and more.

The document will be put to a vote at the European Parliament Committee on Economics and Monetary affairs, according to a March 6 tweet by Stefan Berger, who is a member of the committee. Berger said that the committee will vote on this on March 14, after the final draft of the bill is submitted. He had also clarified that the bill won’t include any text that recommends a ban on proof-of-work crypto mining.

Proof-of-work (POW) is a system of mining cryptocurrencies, used by tokens like Bitcoin. The system rewards all miners for lending computing power to crypto transactions, and hence draws as much computing power as data centres. Since most of this power comes from fossil fuels, POW mining is said to be intensive on the environment. It was amongst the chief reasons for China’s ouster of miners from within its borders last year.

The new policy document also resembles one submitted by the G7 countries’ Financial Action Task Force (FATF) earlier, though it has been submitted independently of the FATF.

The EU’s concerns about crypto being used to fund terrorism and launder money have been echoed elsewhere too. Last month, Canada’s deputy prime minister and minister of finance, Chrystia Freeland, announced that the country’s government is going to introduce anti-money laundering and terror financing laws that cover crowdfunding and payment service providers.

"These changes cover all forms of transactions, including digital assets such as crypto currencies," she said at the time.

EU and Canada aside, Israel’s defense ministry had announced that it seized 30 crypto wallets from 12 accounts that were owned by the Hamas terror group, on February 28.

“The global reach, the speed at which transactions can be carried out and the possible anonymity offered by crypto asset transactions make crypto-assets particularly suitable for criminals seeking to carry out illicit transfers across jurisdictions and operate beyond national borders,” the EU policy document said.

It added that the Union should “aim to advance the implementation at global level of the standards established under this Regulation and also to develop the international and cross-jurisdictional dimension of the regulation and supervision of transfers of crypto-assets in relation to money laundering and terrorist financing”.

SEE ALSO:
Amid a highly volatile market, here is an outlier stock that surged 9%
Indian equity indices extend losses due to skyrocketing crude oil prices amid Russia Ukraine war
L&T, TCS, Metro Brands, ONGC and other hot stocks to watch out for on March 8