European Crypto Firms Call On Regulators To Give New Rules a Second Thought

Leaders from 46 different crypto firms have addressed regulators in the EU, calling for a reconsideration of recent industry rules.

In a letter seen by Reuters, the crypto executives wrote to 27 different EU finance ministers on April 13 asking that new regulations didn’t go beyond the already existing anti-money laundering rules from the Financial Action Task Force (FATF).

In particular, the executives are mostly referring to new proposals that would require crypto platforms to record and store very elaborate and meticulous information on every digital currency transfer.

The letter said that the regulations would reduce crypto holders’ privacy, safety, and would ultimately “put every digital asset owner at risk" by leading to public disclosure of transaction details and wallet addresses.

Europe’s MiCA (Markets in crypto assets regulation) bill, still in negotiations, aims to implement wide-ranging standards on the crypto industry. The organizers behind the letter asked that the EU exclude decentralized platforms from the regulations, which would be forced to register as legal entities under the rules. In addition, the letter requests that decentralized stablecoins be exempt from MiCA.

According to Reuters, CoinShares CEO Jean-Marie Mognetti said Europe already has more complex crypto regulations than other regions, which prevents businesses from growing in Europe.

Diana Biggs, Chief Security Officer at DeFi Technologies, reportedly said she was keen to increase the influence of the European crypto industry on policymaking in Brussels.

The crypto chiefs unofficially have support from their counterparts on the other side of the Atlantic, who oppose the EU’s plan for crypto. One of the most unpopular aspects of MiCA is the crackdown on “unhosted wallets,” or non-KYC applications for storing crypto such as Metamask.

Under the new rules, users will have to confirm ownership of an unhosted wallet before sending and receiving to exchanges.

“If adopted, this revision 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,” Coinbase’s chief legal officer Paul Grewal said earlier this month.

“Unlike with cash, law enforcement can track and trace digital asset transfers with advanced analytics tools. None of this requires upsetting the settled privacy expectations of wallet holders because the open architecture underlying digital assets is public and offers unprecedented transparency into transaction details.”

MiCA is expected to go through, as long as regulators can agree on a final draft.