Earlier, EU reached a provisional agreement to impose “Travel Rule” to cover digital assets and ensure that crypto transfers for all wallets (including non-custodial or unhosted wallets).
The provisional agreement allows authorities to trace and block anti-money laundering (AML) and terrorism financing.
Non-custodial wallets refer to those wallet addresses where users own the private key.
The “Travel Rule” refers to a measure to track the source and whereabouts of funds, and it requires that information on the source of funds and their beneficiaries be disclosed along with the transactions.
However, EU has decided to remove non-custodial wallet from “Travel rule“. But with new amendment, EU have expanded scope of anti-money laundering (AML) regulation to decentralized autonomous organizations (DAOs), decentralized financial (DeFi) , NFT and metaverses.
The amendment will also require crypto asset service providers to adhere to AML rules when processing transactions over 1,000 euros (US$984).
The amendment is pending approval by the European Parliament.
Source: The Block.
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