LONDON (Bywire News) - As regulators seek to reign in the free-wheeling cryptocurrency sector, more than 40 crypto leaders have asked the EU to scale back its clamp down on the sector. They have called on the block not to require crypto firms to disclose transaction details – a move that they say could threaten the privacy of digital asset holders.
Along with other regulators, the European Union has been working to bring trust and oversight into the crypto sector. However, they are widely seen as being ahead of the UK and the US in developing rules for the sector.
That has provoked concern within the cryptocurrency sector that regulatory clampdowns could hinder growth. In a letter sent to the 27 EU finance ministers, leaders in the crypto space have asked policymakers to ensure regulations did not go beyond the rules already in place under the global Financial Action Taskforce (FATF) which sets standards for combating money laundering.
The letter comes after leaders backed new safeguards to trace Bitcoin and other cryptocurrencies. The rules would require cryptocurrency companies to gather and hold information about the individuals behind transactions. It aims to combat fears of money laundering. However, the rules have been opposed by many leading organisations within the cryptocurrency sector.
In their letter business leaders warned the proposals "will put every digital asset owner at risk" by leading to the public disclosure of their IDs and wallet addresses.
Meanwhile, the EU is also introducing a new framework, MiCA to regulate all issuers and service providers in the EU dealing with crypto assets. The European Parliament recently approved its draft of the regulation which will be negotiated with the EU’s executive branch and heads of member states.
The letter’s authors urged regulators to exempt decentralised finance initiatives from the requirements to register as legal entities.
The letter demonstrates a move within the cryptocurrency sector to up its commitment to influence policymaking. At a time when regulators around the world are working to adopt their own approaches, the nature of that regulation could have profound implications on the future of the cryptocurrency sector.
(Writing by Tom Cropper, editing by Klaudia Fior)