Crypto Regulation Concerning “Unhosted Wallets” Gets Approval From EU Parliament’s High Powered Committees

Crypto Regulation Concerning “Unhosted Wallets” Gets Approval From EU Parliament’s High Powered Committees

At least 2 high powered Committees of the EU Parliament have approved the most hyped crypto regulation concerned “unhosted digital wallets”. While discussion on the primary regulation i.e. Transfer of Funds Regulation (TFR) is still going on, draft law has been approved by LIBE and ECON. European crypto community is expecting adverse influence emanating from the passing of the draft law on the domestic crypto market.

EU Parliament’s Take On Crypto Law

It has been a while since when the European Parliament has taken a bold initiative to amend and incorporate laws with regard to virtual assets. In this connection, the lawmakers of the region had collectively brought a law called Transfer of Funds Regulation (TFR) for discussion and debate from the Parliamentarians. According to local and international crypto communities, they claim that the proposed law is extremely controversial and would eventually hurt the global crypto economy. Since the draft regulation’s aim is to deal with ‘unhosted digital wallets’, therefore, it is expected to have a severe negative impact.

The proposed law is however still under debate and discussion in the EU Parliament. However, a development has taken place with regard to the law proposal. It was noted that two of the highest powered Parliamentary Committees of the EU Parliament have approved the law for passing.

EU Parliament’s High Powered Committees Approve Draft of TFR

It has been confirmed that Parliamentary Committees namely Economic & Monetary Affairs (ECON) and Civil Liberties, Justice & Home Affairs (LIBE) have collectively approved the law. Both Committees are of the view that the law would provide a deterrent against misuse of digital currencies and therefore necessary. On the other hand, European as well as international crypto community has not been pleased with the EU Parliamentary Committees’ approving the controversial law. They believe that if the law is passed and implemented then crypto’s future in European region is doomed.

Controversial Article 5 in TFR

According to previous news reports, draft law contained a provision which was found to be very controversial. This provision was contained under Article 5 of the draft law which talks about ‘unhosted wallets’. Usually the word ‘unhosted wallets’ is a term which has been created by financial institutions for making a reference to ‘digital wallets’. So the problem is with the definition of the word ‘unhosted wallets’ whose scope and ambit is ambiguously wider than the obvious.

The impact of this controversial article would be that every type of digital wallet, whether hosted or non-hosted wallets would be subject to the law. It has been proposed in the law that every unhosted wallet would be duty-bound to report every transfer over and above EUR 1,000 made from wallets of non-customers.

GDF Advises Reconsideration of Draft Law

Prominent crypto bodies like Global Digital Finance (GDF) have urged the EU Parliament to re-consider the law before passing it. It said that the law as well as the provisions contained therein are destructive in nature and will destroy the digital asset sector. GDF further said that while cryptocurrency regulation is must yet the regulation requires law makers to adopt ‘proportionate’ method.

In the meanwhile, GDF endorsed that reinforcing the threshold of Euro 1,000 is essential. However, the requirement of reporting directly to the ‘authorities’ should immediately be removed in the best interest of the digital asset sector.

Actions in respect of crypto regulations are at presently serious affecting the global crypto economy. The lead coins of the market i.e. Bitcoin and Ethereum both have seen their values decreased by more than 6%. At presently, both have been trading hands at the prices which are lower than US$ 40K and US$ 3K respectively.

Support Level Is Essential For Bright Future

Lead crypto coins are all trying to achieve at least the support levels, which they had lost in November 2021. However, in their attempts they succeed by gaining short term gains and later accelerate lower than their actual price. For instance, US$ 3,120 was assumed to be the support level Ethereum price yet the coin lost 6% and accelerate down below US$ 3,000.

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