In parallel with the MiCA regulation, the Council of the European Union has also adopted the Transfer of Funds Regulation (TFR), a set of texts that aims to drastically increase the monitoring of cryptocurrency flows between digital asset service providers. What will change in your daily life as soon as these measures take effect?
TFR about to enter into force in the European Union
It will not have escaped you, the European Union is making great strides in creating a regulatory framework for the cryptocurrency ecosystem.
In parallel with the approval of the MiCA regulation by the Council of the European Union, the latter also validated another aspect of the regulation: Fund transfer regulations (TFR).
💡Before discovering the TFR measures, find out about the flagship measures of the MiCA regulation that will come into force in 2024.
As with MiCA, The TFR has yet to be validated by the European Parliament on 10 October, but the outcome of the vote is already known, because TFR was the subject of a political agreement between the institutions concerned last June. After this vote, the TFR will be entrusted to lawyers and linguists to be published in the Official Journal of the European Union.
The provisions of the TFR will then enter into force in 2024, 18 months after its publication in the Official Gazette.
What are the changes made by TFR?
the The fund transfer regulation rhymes with the arrival of the travel rule for cryptocurrencies. The travel rule is a provision recommended by the Financial Action Group (FATF), which obliges the actors concerned – the Cryptocurrency Service Provider (CASP), equivalent to PSAN in French, – to exchange information about their customers for certain transfers.
This standard was developed to combat money laundering and terrorist financing (LCB-FT). The Travel Rule will also allow businesses to report suspicious activity and authorities to request transaction details.
Let’s see this in more detail with the 3 situations envisaged by the TFR.
The rule of travel among the CASPs
In the context of applying the Travel Rule, the biggest problem for CASPs and their users is that the rule applies regardless of the amount transferred. So even if you only transfer € 5 in Bitcoin (BTC) from one platform to another, the Travel Rule will apply.
This implies that the ordering CASP must transmit with the transaction your surnames and first names, the destination wallet, your account number, your postal address, your identity number (identity card or passport) or your date. and place of birth.
On the part of the beneficiary of the CASP transaction, the latter must transmit your first and last name, your address and your account number.
To comply with the Travel Rule there are already solutions such as VerifyVASP (UpBit and Chainalysis) or TRUST (Coinbase). These entities represent conglomerates of actors who have developed solutions to easily exchange their customers’ data under the Travel Rule.
The travel rule between a CASP and a self-hosted wallet
For transfers from a CASP to a self-hosted wallet (i.e. all wallets where the user has their private key), the Travel Rule will apply starting from a threshold set at € 1,000.
Initially, all transfers between a CASP and a self-hosted wallet were affected by the travel rule. It is therefore a small victory for the ecosystem.
To comply with the Travel Rule in such a situation, solutions such as Sismo and Anima Protocol are considered.
The rule of travel between self-hosted wallets
Among all these provisions, it should be noted that the Travel Rule will not apply to exchanges between 2 self-hosted wallets. For example, a transaction made between 2 MetaMask wallets will not be subject to the Travel Rule.
What about the GDPR?
With regard to the GDPR (General Data Protection Regulation), CASPs must comply with its provisions in applying the Travel Rule. In this regard, Adan adds:
“A CASP can block a transfer if it believes the opposite CASP is not GDPR compliant or does not have sufficient security measures [pour contrer les hacks ; NDLR]. “
We thank Adam (Association for the Development of Digital Assets) for answering our questions about severance pay.
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Source: Document published by the Council of the European Union
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