Cryptocurrencies, the industry: “Privacy and security at risk with the new rules”

The sector's players intensify their efforts to gain a grip on Brussels: in a letter to the 27 Finance Ministers, spotlight on the impacts deriving from the obligation to collect and store information on those involved in digital currency transfers

19 Apr 2022

Veronica Balocco

More than 40 leaders in the cryptocurrency sector have asked the European Union, through a letter sent to 27 Finance Ministers, not to require the companies in the sector to disclose the details of the transactions and to "limit attempts to jeopardize the platforms fast growing decentralized financial institutions ”, making sure that their regulations do not go beyond the rules already in place within the Global Action Task Force (GAFI), which sets the standards for the fight against money laundering. The European Union, like countries and jurisdictions around the world, is working to regulate the cryptocurrency sector.

Index of topics

• Appeal against the risks of the new safeguards

• Exclude decentralized projects

Appeal against the risks of the new safeguards

Last month, Old Continent lawmakers voted in favor of new safeguards for tracking bitcoin and other cryptocurrencies. The rules, thwarted by major US exchange Coinbase Global, would require crypto companies to collect and retain information about who is involved in digital currency transfers.

In response to the vote, 46 European industry leaders and organizations said in their letter that the proposals "will put every digital asset owner at risk" leading to public disclosure of transaction details and wallet addresses. This - they said - would reduce the privacy and security of cryptocurrency holders.

Exclude decentralized projects

The EU is also introducing a broader framework, known as the MiCA, to regulate all issuers and service providers dealing with cryptocurrencies. The European Parliament recently approved its draft regulation, which will be negotiated with the executive power of the EU and the heads of the member states. The letter called for the EU to exclude decentralized projects, which include decentralized finance or "DeFi", from the requirements for registering as legal entities. He also stated that some decentralized “stablecoins” should not be subject to the MiCA regulation.

CoinShares CEO Jean-Marie Mognetti, who organized the drafting of the letter, said Europe currently has more complex cryptographic regulations than other regions, which discourages companies from pursuing a growth path in Europe. Diana Biggs, chief security officer of DeFi Technologies, added that she is keen to increase the influence of the European crypto industry on policy making in Brussels. “There have not been strong enough or coordinated efforts in our sector in Europe,” she said.

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