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The EU Parliament has voted in favor of a transfer of funds regulation affecting unhosted crypto wallets. The bill is not in the final stage of the legislative process, with a plenary session expected in April.
Committees from the European Union parliament have voted to pass its controversial bill on cryptocurrencies, which would institute a number of privacy-related measures on unhosted crypto wallets in the market.
The ECON and LIBE committees of the parliament voted in favor of the measures on unhosted wallets, and sometime later, the decision to enter trilogue negotiations had been approved.
Targetting crypto wallets
There were two specific compromises that were voted on, with both passing by narrow margins. The trilogue sessions will allow members to suggest changes, but whether that will take place remains to be seen. Unhosted crypto wallets simply refer to funds held by individuals without requiring an intermediary, while hosted wallets require an intermediary.
The markets have dropped sharply following the news, with the total market cap going down by 4.1% following the news. Bitcoin’s price is down nearly 5% over the past 24 hours, dropping from $47,468 to $44,347 at the time of publishing. More regulation may be on the horizon, as the EU warns of risks related to the market.
The EU amendment would require unhosted wallets to be verified, which would go against the principle of decentralization and privacy that the market stands for. Unstoppable Finance detailed the effects of the regulation in simple terms, saying that it would make DeFi more costly and burdensome, “All without a clear benefit in the context of AML.”.
Coinbase asked the public to speak up against the EU amendment, saying that it would result in changes to information collection. The exchange made damning remarks about the amendment, saying that it would “unleash an entire surveillance regime on exchanges like Coinbase, stifle innovation, and undermine the self-hosted wallets that individuals use to securely protect their digital assets.”
DeFi about to be rumbled by regulations
The ruling is doubtless going to have a tremendous impact on the crypto market, despite the fact that it has not officially been ratified. However, the Vice President of the European Parliament Eva Kaili has said that the “transfer of funds from unhosted wallets to EU CASPS should be possible in a proportionate way.”
The response from the crypto community has been universally negative. Analysts believe it could drive investment and innovation away from the region.
The United States treasury is also considering passing regulations related to unhosted wallets. This rule change is similar to that of the EU’s, and it appears that the crypto market could be in for a rough time in 2022 as far as regulation is concerned.
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