A counter-proposal by the Consortium CryptoValues to the proposed amendments to the Transfer Funds Regulations (“TFR”) that will extend the “travel rule” to the crypto asset service providers

On 20.7.2021, the European Commission’s AML package included a revision of the Transfer Funds Regulations (“TFR”) (i.e. Proposal on “Regulation of The European Parliament and of the Council on information accompanying transfers of funds and certain crypto-assets (recast)”) that will extend the requirement for crypto asset service providers (“CASPs”) to accompany each transfer of funds with information on the originator and beneficiary to crypto-asset transactions.

The Proposal aims to implement in the European Union the so-called FATF/GAFI “Travel Rule”, which imposes on CASPs to share the personal information (name, address, etc.) of their customers concerning each transaction through their platforms.

Unfortunately, following the version meanwhile elaborated by the Council of the EU on 29.11.2021, the European Parliament’s Committees ECON and LIBE, on 31.03.2022,  introduced some stringent amendments. Unlike the initial Proposal of the EU Commission, the current draft of the EU Parliament includes an obligation to “verify the accuracy of the information concerning the originator or beneficiary of any unhosted wallet”.

The Consortium Cryptovalues does not only criticise the last version of the current Proposal but also its former original draft version (together with the one of the Council of the EU).

Both versions lead to unwanted consequences that would make the new regulatory framework unfit for its purpose, opening the possibility of numerous risks of non-compliance as those further described in the attached position paper (“Position Paper”). We consider that any partial amending effort applied to the current legislative Proposal would not be sufficient, and we ask, therefore, for changing the Proposal more fundamentally. As suggested in our Position Paper, current obligations must be removed and replaced with viable, more effective alternative solutions to achieve the Proposal’s objectives.

The Consortium Cryptovalues has already liaised with the European Institutions to raise the industry’s voice. Since the European legislative procedure has not ended yet, please join us in this cultural battle and raise your voice too!

DOWNLOAD:Position Paper

DOWNLOAD:CryptoValues letter