Thread by @BlockchainforEU

Latest UPDATE on the #TFR (Travel Rule) trilogue:

EU institutions are working to finalise the #TFR text to implement the #travelrule in Europe. Please find below the latest details. The aimed-for deadline for conclusion is still the first week of June.

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Key issues on table:

The provisions introduced by the @Europarl_EN requiring #verification of information for each transfer of assets, the additional requirements applied to transfers to #unhosted wallets and the #blacklist of non-compliant entities.

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In the past weeks, the @EUCouncil has taken onboard the concerns from the blockchain & crypto #industry, as well as those of regulators and competent #authorities (!), that flagged the impracticality and unintended consequences these provisions would have.

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Industry is worried of additional #compliance costs & legal #uncertainty created by having to introduce #manual verification processes in an automated sector. Regulators do not see the #addedvalue these provisions would bring and do not have the #resources to enforce them.

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Both industry & regulators argue that #AML can be done in a BETTER way by leveraging the inherent transparency of #blockchain technology + relying on blockchain analytical tools (e.g. @chainalysis), instead of applying outdated rules that work in traditional finance.

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However,the majority of @Europarl_EN is not willing to compromise on its provisions, does not listen to concrete arguments that go against its views, nor accept the position of the #co-legislator & would rather drag on the file than compromising & listening to the industry.

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.@ernesturtasun insists technological solutions can be found, such as a #swift infrastructure for #CASPs to verify users' info. This would take years to be implemented, leaving CASPs to deal with the consequences until then. A goodbye to immediate transfers of cryptoassets!

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This would be a massive blow for the nascent #web3 economy in the EU. France has tried to rush negotiations to make sure the #TFR and #MiCA files would be finalised before the end of its #PFUE2022 and provide the EU a proper #regulatory framework to deal with #cryptoassets.

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But the opposition of @ernesturtasun & @Assita_Kanko to the pragmatic compromises proposed by the #MemberStates now risks delaying the #TFR trilogues, meaning the file would end up on the table of @CZECHIAinEU, something the Czechs wanted to avoid as much as possible.

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