The European Parliament continued to keep crypto users and advocates on the edge of their seats last week as yet another piece of potentially harmful legislation — this time a set of demanding data disclosure requirements for digital asset service providers — was passed in just days. voted. after a near miss in banning proof-of-work-based cryptocurrencies.
Contrary to the Market’s relatively happy solution in Crypto Assets framework situation, the EU’s new anti-money laundering rules kept all crypto-hostile language as they move to the next round of consideration, the so-called trilogue negotiations. If the rules are enforced as they are, compatible crypto exchanges could be forced to suspend transactions with “unhosted” or self-kept crypto wallets.
The tax filing deadline is approaching across the Atlantic and the Biden administration has unveiled its plan to reduce the budget deficit by nearly $5 billion by streamlining reporting rules and digital wealth tax collection in the coming fiscal year.
On the monetary policy front, the White House appears to have secured the passage of its four Federal Reserve candidates to the full Senate vote. What would previously be considered a formality, the Fed’s nomination process has become yet another partisan battleground amid the increasing politicization of monetary policy.
Self-hosted does not mean “unhosted”
The origins of regulators’ habit of labeling a crypto wallet not kept on a centralized platform as “unhosted” — a term that already conveys a degree of neglect — can be traced back to at least December 2020, when the US Treasury Department first attempted to impose financial monitoring requirements on crypto exchanges that facilitate transactions to such wallets. Using this language gives the impression that the only acceptable format of a “legal” crypto wallet is “hosted” by a centralized third party – an idea that is absurd to most people in the crypto space.
Armed with this rhetorical weapon and in the spirit of the Financial Action Task Force’s “Travel Rule”, EU lawmakers went beyond the guidelines of the international group. While the FATF recommends that the disclosure of personal data of transaction parties be triggered by transactions between exchanges and personal wallets worth more than $1,000, the proposed EU rules extend this to such transactions, regardless of their value. In addition, users sending funds from a wallet to an exchange would be required to report the identity of the beneficial owner of the “non-hosted” wallet to the platform, and exchanges would be required to verify this information. Obviously, such requirements will place a heavy burden on compatible virtual asset service providers.
An unattended digital dollar?
Stephen Lynch, a member of the US House of Representatives from Massachusetts, has introduced a legislative initiative proposing a form of digital cash to maximize consumer protection and data privacy. The proposal apparently aims to address privacy and financial oversight concerns surrounding a potential US central bank (CBDC) digital currency, which several members of Congress have expressed in recent months. First, the future e-cash wouldn’t even formally qualify as central bank currency, as the Treasury would be tasked with developing the pilot. At the same time, the bill explicitly states that the proposed Treasury money is not intended to exclude or replace a potential Federal Reserve-issued CBDC. Meanwhile, the move to review the Fed’s ability to issue a retail-focused digital currency has received a second wind this week, with US Senator Ted Cruz sponsoring an accompanying bill to Representative Tom Emmer’s previous legislation. which was aimed at that.
All Quiet on the BTC ETF Front
Another application of Bitcoin exchange-traded funds bites the dust: This week, the US Securities and Exchange Commission rejected the proposed rule change to allow ARK 21Shares Bitcoin ETF to trade on the Chicago Board Options Exchange. The justification quoted the well-known mantra that the proposed product failed to meet the requirements of the Exchange Act because it lacked “a comprehensive agreement to share supervision with a regulated market of significant size” with respect to the underlying. Another contender for the award for sponsoring the first regulated spot Bitcoin ETF in the United States, Grayscale, is apparently preparing for a legal battle in case the regulator rejects its offer. The deadline for the SEC to make a decision on Grayscale’s product is July 7 this year.