Crypto businesses are increasing their efforts to influence European lawmakers concerning the design of cryptocurrency regulatory framework. According to a letter seen by Reuters, more than 40 crypto leaders have asked the European Union and different EU finance ministers to ensure that regulation does not go beyond rules already in place under the global Financial Action Task Force (FATF), which set principles for fighting money laundering.
Unlike in the U.S., where crypto firms have established several associations in Washington D.C. to lobby U.S. lawmakers, in Europe the crypto community is not yet so well organized. “There hasn’t been strong enough or coordinated efforts across our industry in Europe,” said Diana Biggs, chief security officer at DeFi Technologies, who organized the letter.
Last week the crypto community gathered in Paris for a two-day conference to discuss the present and the future of the industry. The letter seen by Reuters is dated April 13, the same day that the conference took place.
The European Union is ahead of other jurisdictions like the U.S. or the U.K. when it comes to crypto regulation. In March, the European Parliament approved the draft of the Markets in Crypto Assets (MiCA) Regulation that regulates issuers and providers of crypto assets in Europe. This regulation is not yet finalized, and it may still be subject to changes during the interinstitutional negotiations with member states.
In the letter, the crypto firms asked the EU to exclude decentralized projects from requirements to register as legal entities. It also said that certain decentralized stablecoins should not be subject to MiCA regulation. The current draft of the regulation requires issuers of stablecoins to register, issue white papers, obtain authorizations and in some cases, when the stablecoin is of significant importance, to be supervised by the European Banking Authority. According to some experts interviewed by PYMNTS, the proposed legislation discourages the issuance of Euro stablecoins.
Read More: EU Crypto Asset Rules Make Euro Stablecoins Unprofitable
But the second rule that raised even more concerns among major exchanges is the “travel rule.” EU lawmakers passed on March 31 a proposal for “regulation on information accompanying transfer of fund and certain crypto assets” that would increase the information requirements that crypto asset providers will need to collect and share for each transaction. Under the new rules, crypto exchanges would have to record and obtain data for each customer in every crypto transaction, with no “de minimis” limit as the original draft contemplated (a € 1,000 threshold). Crypto firms alleged that this would reduce holders’ privacy and safety.
“If adopted, this revision would unleash an entire surveillance regime on exchanges like Coinbase, stifle innovation, and undermine the self-hosted wallets that individuals use to securely protect their digital assets,” said Paul Grewal, chief legal officer at Coinbase.
Read More: EU Lawmakers to Vote on Tougher Crypto Transaction Requirements
Although some of the new rules have already obtained approval by the European Parliament’s committee, there is still time for the crypto firms to influence lawmakers. First, during the interinstitutional negotiations it is possible, and not unusual, to add a few changes to the text. Second, the crypto regulation, MiCA, may need secondary legislation to clarify some of its provisions. And third, there are some areas in the crypto space like non-fungible tokens (NFTs) and most of the products that are purely decentralized that fall outside the scope of the regulation and may be subject to new regulatory instruments in the future.
Read More: EU Crypto Regulation May Need Clarification From Day One
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More