May 28, 2022

Volume XII, Number 148

Advertisement
Advertisement

May 27, 2022

Subscribe to Latest Legal News and Analysis

May 26, 2022

Subscribe to Latest Legal News and Analysis

May 25, 2022

Subscribe to Latest Legal News and Analysis

EU Lawmakers Vote to Regulate Digital Wallets

European-based and operating digital asset investors and entrepreneurs are on notice: The European Union (EU) is considering hobbling the blockchain and crypto ecosystem.

On March 31, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) approved provisions to Europe’s Transfer of Funds Regulation that, if adopted by the European Parliament, would restrict Virtual Asset Service Providers (VASPs) from transacting with un-hosted wallets without first confirming ownership via complete know-your-client (KYC) review.

An un-hosted wallet is a non-custodial wallet managed entirely by an individual. This includes “cold” wallets, such as Ledgers, Trezor, and SafePal, as well as “hot” wallets, like MetaMask. If the provisions are adopted as proposed, un-hosted wallets would be outlawed within the EU, and the only permissible crypto wallets will be those held by exchanges that maintain KYC review standards to regulatory-approved standards. This may very well undermine the ability of companies and decentralized autonomous organizations (DAOs) to operate within the EU.

Additionally, under the proposed regulation, VASPs would be required to report all crypto transactions worth more than 1,000 EUR to relevant anti-money laundering authorities.

Bitcoin dropped $2,000 from $47,500 to $45,500 in four hours following the announcement of ECON’s approval of these provisions.

The regulations will next be discussed in a trilogue with the European Commission and European Council in mid-April, with a result likely mid-to-late-July.

If adopted, following trilogue consideration and debate, crypto market participants will have nine months to preliminarily comply with the proposed regulation, and 18 months to be in full compliance.

© 2022 Dinsmore & Shohl LLP. All rights reserved.National Law Review, Volume XII, Number 96
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

David A. Lopez-Kurtz Finance Attorney Dinsmore Cincinnati
Associate

David focuses his practice on corporate and securities matters with an emphasis on private and public securities transactions, compliance, and disclosure obligations. He also represents both large and small companies on all aspects of business formation, fundraising, commercial contracts, mergers and acquisitions, and regulatory compliance.

He represents clients in the digital currency and blockchain ecosystem, working as outside general counsel and drawing on the firm’s national platform and comprehensive range of capabilities as he advises on...

513-977-8328
Zelong Derrick Hou Cincinnati Ohio Business Government Law Associate Attorney Dinsmore & Shohl LLP
Associate

Derrick focuses his practice on business law, corporate governance, mergers and acquisitions, and securities matters. Prior to joining Dinsmore, Derrick worked at a Fortune 100 company where he gained extensive knowledge on data privacy and cybersecurity matters. He received his J.D. from Indiana University Maurer School of Law. While in law school, he was the managing editor of Indiana Law Journal.

513-639-9202
Advertisement
Advertisement
Advertisement