“The most far reaching crypto regulations yet imposed in the EU and the implications for the cryptocurrency industry.”
There’s no doubt that crypto-assets offer a liberating alternative to conventional finance, allowing ordinary people the chance to get back control of their money from big banks. But lately, wariness towards crypto from some policymakers has created a political reality that crypto businesses now face.
In the U.S. where crypto businesses lobbying power is concentrated, political divides are becoming more apparent as the Biden administration takes a harder line on crypto regulation. Democrat Senator Elizabeth Warren is pushing for a crackdown on crypto's carbon footprint and has warned platforms to get tough on Russia-sanctions busting. The SECs top regulator Gary Gensler, is following their lead when it comes to a tougher approach.
picture: Ted Cruz, newsbtc.com
On the other side, Republicans like Ted Cruz, welcomed bitcoin in the state of Texas and are adamant that crypto will bring "enormous opportunities" and "vast amounts of wealth". More broadly, Republicans have come out swinging against Gensler and the SEC’s efforts to regulate the industry more heavily.
Here in Australia, the debate on regulation is less divisive, with pro crypto Senator Andrew Bragg, pushing for the need for clear and practical regulation of the crypto industry, tweeting “Australia must regulate crypto or lose the race for capital, people & consumer protection”.
In the EU, this division has become wider in the European Parliament, which has debated several bills on how to regulate crypto. Many conservative MEPs are accusing their adversaries of politicizing a technology that they think should be nurtured not smothered.
On the 29th of last month (July), Spanish Green party MP Ernest Urtasun announced on Twitter that an agreement had been reached on a proposal for some of the most far reaching crypto regulations yet imposed in the EU, extensions to the so-called CASP travel rules.
The extension requires that “Crypto-assets service providers” (CASPs) Record information on the source of the asset and its beneficiary, and that this information travels with the transaction and is stored on both sides of the transfer.
In the updated proposal there is no minimum limit (Previously the minimum threshold was €1,000) Which means all crypto transactions that involve CASPs will need to comply with the travel rule, regardless of how much cryptocurrency is being moved.
Some of the main points are listed:
● KYC will be required for crypto transactions of any amount between hosted wallets
● Customer identity needs to be verified for even the smallest crypto transfers, if it’s between two regulated digital wallet providers – but payments to unhosted private wallets will largely be left out of laundering checks.
● CASPs will be required to collect information on all transfers involving unhosted wallets.
● Within 18 months of these rules being applied, further regulation may be added to further regulate unhosted wallets
The nature of financial regulations means that these rules, especially since they cover a large jurisdiction like the EU, means that they could well end up affecting crypto service providers like FAMEEX that are based in Australia. But is it all bad news? Let’s look under the hood…
Some in the crypto community maintain that the new regulations as currently proposed by the EU are reactionary and regressive. Legal commentators have noted that the regulations themselves may even be in violation of the EU’s own rules, which state that EU law and national law must be compatible with Articles 7 and 8 of the EU Charter of Fundamental Rights, And laws that do not comply with the charter are often later found to be invalid.
It also remains to be seen whether the regulations will be modified upon further review when these inconsistencies are discovered - the updates still need to be confirmed by the Council and the Parliament before they can be formally adopted by EU member states.
Others have also pointed out that the requirements appear to demand onerous and expensive compliance procedures for even small or startup crypto service providers and a smaller industry with fewer players means less freedom and less choice for consumers.
In our opinion, there are certain advantages to these rules as they provide clarity for crypto businesses and help to align internal processes and make operations easier. As a licensed crypto exchange, we at FAMEEX see this long-expected regulation as an opportunity to further improve legal certainty and expand our operations to new jurisdictions.
In Australia, cryptocurrency and cryptocurrency exchanges are legal. In addition to this, Australia's cryptocurrency regulations and laws are progressive. The legal status of cryptocurrencies in Australia means that they are subject to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF 2006), section 5 and associated rules. Accordingly, Bitcoin, and cryptocurrencies that share its characteristics, are treated as property and subject to Capital Gains Tax (CGT).
In order to provide the safest crypto trading experience for FAMEEX users, it is the number 1 priority for our company to strictly comply with the regulations in the jurisdictions in which we are operating. As a fully licensed Australian crypto asset business registered with AUSTRAC, we comply fully with any and all regulations that apply to the operation of our exchange.
We truly believe that licensing can be useful in allowing crypto service providers to operate a successful and growing legal business. That being said, the regulatory authorities must strike a delicate balance between consumer protection and consumer freedom. Cryptocurrency businesses will always seek to operate in a regulatory environment that allows them the stability and freedom to grow and we believe Australia’s approach to crypto regulation provides that happy balance.
FAMEEX will continue to observe the regulatory changes around the world, and update our internal procedures to best reflect our willingness to adhere to the spirit of rules that combat cybercrime and make our world a better, safer place. But at the same time we hope regulators will take into account the views of the crypto industry when drafting regulations so that honest and legal companies are not driven to find new jurisdictions or driven out of business altogether.
We intend to keep our valued customers updated with the latest developments. As always, we are interested in your views. If you have any questions about how regulations may affect your trading experience on FAMEEX do not hesitate to drop us an email on Service@mail.fameex.info.
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