It crunches in the European Union. Actually, the legislators of the federal state are currently negotiating in a trialogue on the so-called Transfer of Funds Regulation (TFR). This aims to introduce comprehensive anti-money laundering and anti-terrorist financing policies for the crypto sector. However, as insiders report, the negotiations currently seem to be faltering.
The reason for this lies in individual demands of the EU Parliament. Among other things, it would be about paragraph 18aa. According to this, providers of crypto transactions should in future not allow “any transfers of crypto assets” from or to non-compliant providers of crypto transfers. Industry experts see it Ban on unhosted wallets, which could cause lasting damage to Europe as a DeFi location. Parliament voted to include the clause at the end of March.
EU negotiations blocked
According to information from the insider source, there is resistance from the ranks of the EU member states, who are pushing for the deletion of the ban. A ban on unhosted wallets cannot be implemented in practice. The demand was last expressed during the trialogue negotiations on May 16th.
However, the chief negotiators in the EU Parliament, Ernest Urtasun and Assita Kanko, continue to insist on the passage, knowing that the factions of the Greens, Left and Social Democrats are behind them, most of whom support the initiative.
Meanwhile, the EU Commission is trying to act as a mediator and is calling for a compromise. However, the fronts have hardened and an agreement is currently not in sight. The member states “under no circumstances” want to support a ban on unhosted wallets, the insider source reveals.
Crypto-Space hopes to avert the ban
Meanwhile, the crypto space follows the negotiations with eagle eyes. A ban on unhosted wallets is seen more than critically in the industry. Robert Kopitsch from the association Blockchain for Europe explained the importance of avoiding a ban.
If there is a ban, there will be no Web3 industry and decentralized identity in Europe that would give citizens the chance to self-manage their data. Finally Europe would miss out on the next technological evolution which is why this point is so relevant.
The standoff is now jeopardizing the schedule of the EU’s trilogue parties. A consensus on the TFR should actually be reached by early July. Under the current circumstances, however, an agreement on the desired date seems unrealistic.