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almost all your cryptocurrency transactions will be monitored soon

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 dramatically increase the monitoring of cryptocurrency flows between digital asset service providers. What will change in your daily life once these measures take effect?

https://cryptoast.fr/travel-rule-transactions-cryptomoneys-bientot-surveillees/

TFR is about to enter into force in the European Union

You won’t have missed it, European Union makes great strides in establishing a regulatory framework for the cryptocurrency ecosystem.

In parallel with the adoption of the MiCA Regulation by the Council of the European Union, the latter also validated another aspect of the Regulation: the Transfer scheme (TFR).

💡 Before discovering the TFR measurements, find the main measures of the MiCA regulation which will enter into force in 2024.

As with MiCA, TFR still to be validated by the European Parliament on 10 October, but the result of the vote is already known, because TFR was the subject of a political agreement between the institutions involved last June. Following this vote, 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 Journal.

What are the changes TFR has made?

the Money transfer scheme rhymes with the arrival of the travel rule for cryptocurrencies. The Travel Rule is a provision recommended by the Financial Action Task Force (FATF), which obliges the actors involved – the Crypto asset service provider (CASPs), equivalent to PSANs in French, to exchange information about their customers for certain transfers.

This rule was developed to combat money laundering and terrorist financing (LCB-FT). The travel rule also allows companies to report suspicious activity and authorities to demand details of transactions.

Let’s look at this in more detail with the 3 situations that TFR . offers.

The travel rule between CASPs

In the context of the application of the travel rule, the main problem for CASPs and their users lies in the fact 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 applies.

This means that the ordering CASP must provide your first and last name, the destination wallet, your account number, your postal address, your identity number (identity card or passport) or your date and place of birth with your transaction.

On the side of the CASP beneficiary of the transaction, they must provide your first and last name, your address and your account number.

To comply with the Travel Rule, solutions such as VerifyVASP (UpBit and Chainalysis) or TRUST (Coinbase) already exist. These entities represent conglomerates of players who have developed solutions under the Travel Rule to easily exchange their customers’ data.

The travel rule between a CASPs 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 applies from a threshold of € 1,000.

Initially, all transfers between a CASP and a self-hosted wallet were affected by the travel rule. So it’s a small win for the ecosystem.

To comply with the Travel Rule in such a situation, solutions such as Sismo and Anima Protocol are being considered.

The rule of travel between self-hosted wallets

Of all these provisions, it should be noted that the travel rule does not apply to exchanges between 2 self-hosted wallets. For example, a transaction between 2 MetaMask wallets does not fall under the Travel Rule.

What about the GDPR?

With regard to the General Data Protection Regulation (GDPR), CASPs will have to respect its provisions when applying the Travel Rule. On this subject the Adan adds:

“A CASP can block a transfer if it believes that the other CASP against it does not comply with the GDPR or that it does not have sufficient security measures in place [pour contrer les hacks ; NDLR]. »

We thank Adan (Association for the Development of Digital Assets) for answering our questions about TFR.

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Source : Document published by the Council of the European Union

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