Europe has approved measures aimed at preventing transfers to unhosted crypto wallets

Provisions of a measure aimed against so-called unhosted wallets have been passed by the European Parliament.

European Policy Center

The ECON and LIBE committees agreed on March 31 to accept revisions to the Transfer of Funds Regulation that will compel crypto service providers — typically exchanges — to authenticate the names of the owners of unhosted wallets with which they trade before completing a transaction.

According to voting tallies shared with The Block, the committee votes on the changes in question were 58 in favor, 52 against, and 7 abstentions.

The committees will vote on the Transfer of Funds Regulation again today, although there isn't expected to be any opposition in the final vote. The bill could undergo trilogues with the European Commission and European Council as early as mid-April, pending a final vote.

The European Parliament has accelerated its work on the Transfer of Funds Regulation, the bloc's response to the Finance Action Task Force's proposed worldwide travel rule.

While the European Commission and European Council versions of the regulation include an equivalent requirement for crypto servicers to ask users to identify the owners of external self-hosted wallets, they do not require those servicers to independently verify the identities of those wallet owners — a requirement that the crypto community views as essentially a blockade on transactions from exchanges to self-hosted wallets.

While the new provisions threaten to self-host, they are likely to face strong opposition from the Council and Commission, which are both more technically adept and less politically exposed than Parliament.