Crypto Industry Mobilizes Against Proposed EU Transparency Rules
Crypto advocates were able to sway lawmakers against a provision that could have effectively banned bitcoin in the European Union. Can they do it again?
Robert Kopitsch has been working around the clock to engage with European Union (EU) lawmakers ahead of a parliamentary committee vote targeting crypto transfers.
Kopitsch, secretary general of Brussels-based lobby group Blockchain for Europe, and other crypto advocates have been rallying supporters worldwide to sway members of the European Parliament’s Committee on Economic and Monetary Affairs. The committee is set to vote Thursday on measures that could effectively end all anonymous crypto transfers in the bloc, require verification of transfers to private or “unhosted” wallets, and prohibit crypto transfers between the EU and tax havens.
The provisions, put in place over concerns that crypto is used for illicit activities such as money laundering and terrorist financing, seem to have the support of a majority of lawmakers. Critics say the measures are a violation of privacy.
“We're encouraging everybody to write to their [representatives], reach out to them with tweets and social media, and to give them the feeling that what they're doing is super wrong. And it's not so easy, obviously, right? Because here, it's a more political topic,” Kopitsch said.
Crypto heavyweights from around the world such as Coinbase (COIN) CEO Brian Armstrong and other EU lawmakers such as Vice President of the European Parliament Eva Kaili have shown support for measures that do not over-regulate the space.
Those in favor of heavy anti-money laundering (AML) measures for crypto transfers including Paul Tang, an EU parliamentarian and chair of the tax committee, took issue with the campaign.
Kopitsch agreed regulation is needed, but said the proposed regulations may be too heavy handed. “They think that all the transactions that run [on] crypto are all done by criminals. It's all money laundering. It's all child pornography, terrorist financing,” Kopitsch said, adding that politicians in favor of such provisions do not see the many benefits of crypto and their underlying technologies.
From Germany, Patrick Hansen, head of strategy at Unstoppable Finance, and an outspoken critic of the provision calling for AML checks on transfers to unhosted wallets, has also been rallying members of the crypto community to engage with lawmakers.
Both Kopitsch and Hansen say the vote is too close to call.
The MiCA campaign
Earlier this month, lobbying by the industry reaped benefits. Hansen spearheaded a campaign to persuade an economic committee to vote against a provision in a draft of the Markets in Crypto Assets (MiCA) regulations, the EU’s main legislation package for governing crypto assets, that would have effectively outlawed popular cryptocurrencies like bitcoin and ether.
While that provision did not make it through the vote, Hansen and others were quite certain that even if wasn't rejected at the committee stage, it would not make it into the final version of the legislation after further negotiations with the EU government branches.
But in this case, Hansen fears that if it goes through, the provision on AML checks for transfers to unhosted wallets may make it to the final draft.
“There might be a window of opportunity to change minor things, but the chances are way higher that if it goes through the parliament committee on Thursday, and then it's not challenged, that basically this will just be adopted,” Hansen said.
Meanwhile, Hansen said another provision, calling for an end to the 1,000 euro ($1,100 U.S.) minimum threshold for reporting crypto transactions, is likely to make it through the committee vote.
“I feel like if there is multi-party support for dropping that threshold, who should we convince? ... Generally, everyone's in favor. So let's focus on more contentious issues,” Hansen said, referring to the provision involving unhosted wallets.
UPDATE (April 2, 2022, 14:00 UTC): Adds additional comment from Robert Kopitsch.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.