The Transfer of Funds Regulation TOFR was agreed by the Parliament, Council and Commission on June 29. The TOFR is part of the regulatory frameworks the E.U. The regulation of criptocurrencies is being set up.
The rules and procedures will have to be adjusted and the internal policies and procedures will have to be adjusted accordingly.
The rules will become effective 18 months after the MiCA regulation is applied.
The TOFR has a number of anti-money laundering rules that aim to collect data on cryptocurrencies transactions.
Ernest Utasun, a E.U lawmaker, branded the agreement an answer to the unregulated wild west in a series of tweets on the provisional agreement. He said that the TOFR rules apply to every transaction, even if it is not more than a Euro. Transactions carried out at ATMs are included. In addition to that, CASPs will have to collect data on unhosted wallet transactions. Transactions made to and received from unhosted wallets are included in this data.
The rule requires that the identities of unhosted wallets owners be verified on transactions above 1000. These rules on unhosted wallets seem informed by the thought that illegal actors primarily use them to facilitate crimes.
The reports on Russia leveraging cryptocurrencies to avoid financial sanctions are another topic of contention that could have led to these regulations. As part of these rules, CASPs must bring their operations in conformity with the economic sanctions imposed by the E.U.
The rules do not apply to peer-to- peer P 2 P transactions. Users who are uncomfortable with the data collection could migrate to P 2 P transactions after implementing the TOFR rules.
The rules will regulate digital asset providers relationships with CASPs in third world countries, especially where these providers are unregulated and unlicensed.
The data collected on transactions will be made available to the E.U.
It is trying to implement regulatory frameworks for criptocurrencies activities. The need for cryptocurrencies has been increased because of the several institutional crises in the market since 2022.
Experts and analysts consider the regulatory attempts to stifle cryptocurrencies use in the E.U. The concerns are related to the TOFR rules, which are a breach of the citizens right to privacy.
Many believe that the regulations won't delay the development ofBlockchain in the E.U. rather than aiding the growth of cryptocurrencies. The requirement to collect data on all transactions could make the exchange activities unnecessarily slow and expensive.
The security of the data collected has come under criticism. Many think that pooling the data with CASPs and the governments could make them vulnerable to attacks.
The European Union, the European Commission, and the European Banking Authority are some of the members of the E.U. In the past, institutions that have suffered attacks have been affected.