EU Policymakers Question ‘Resource Intensive’ Crypto Monitoring Proposals

There are new European Union proposals which purport to monitor crypto transactions with unhosted wallets, which could reportedly breach the risk-based approach that is being pushed by money laundering regulators, a European Banking Authority official said Wednesday (April 27).

CoinDesk reported that policymakers have said any decision to cut out a €1,000 ($1,055) threshold for identifying crypto payments would need to be backed up with evidence.

The European Parliament voted on March 31 to identify participants in crypto payments, including transactions with wallets not hosted with any regulated exchange. That led to warnings from the industry about how that could derail innovation and hurt privacy, per the report.

Additionally, the new rules would necessitate forcing large transactions with unhosted wallets to be automatically reported to the authorities — which critics say could be overwhelming. Speaking at an event Wednesday at the European Parliament in Brussels, the European Banking Authority’s Joana Neto said it’s “resource intensive” and questioned who’s going to handle it all.

“If it’s going to be the competent authority, what are they going to do with that information?” she asked, adding that maybe the requirement to report missing data would not be practical despite the theory being good.

PYMNTS wrote that earlier this week, Nikhil Rathi, head of the U.K.’s Financial Conduct Authority, said it was important to support innovation to bolster U.K. economic growth and international competitiveness.

See also: UK’s Financial Regulator Chief Lures Crypto Firms

Speaking at City Week 2022, Rathi said this would mean being a leader in crypto regulation, helping to attract FinTech investors.

The FCA has changed its approach to crypto firms as of late, which has sent messages about how the U.K. regulates. The government also announced new measures recently to accommodate the industry.

Rathi reportedly said the U.K.’s influence on the world had to be considered, setting a standard of “flexibility and safety.” The report also noted that the U.K. represented the bulk of all European FinTech investments from 2021.