The European Parliament is an assembly of elected legislators. The European Council is made up of EU heads of state. On October 5, the Council approved the MiCA regulation and another law dealing with crypto markets. Parliament is due to meet on Monday to give the texts the force of law. However, it appears that these new rules focus a lot on the protection of cryptocurrency investors. What about data protection?
MiCA, rules that undermine data confidentiality
The new European crypto regulations are very focused on protecting investors. At the same time, the MiCA regulation makes cryptocurrency businesses more legitimate and gives credibility to digital assets. Other legislation approved by the Council includes a rule called the Travel Rule. This obliges wallet providers to provide authorities with information on cryptocurrency transactions. Regardless of the volume of a transaction, they must disclose personal information about who is doing the transaction and who is receiving it.
Thus, the introduction of new European rules could undermine privacy of investors. It could make cryptocurrency platforms less decentralized. Note that with the MiCA regulation, it is up to the crypto providers to protect the portfolios of investors. Exchanges and custodians will therefore be held liable in the event of the loss of funds invested by consumers.
This rule puts vendors in a tricky position as hacks are commonplace in the industry. A recent study from Comparitech revealed that more than $7.7 billion has been stolen over the years from cryptocurrency platforms. “If hackers had kept all the crypto they stole and cashed in today, they would have been a fortune of over $40 billionsaid the Comparitech report.
Anto Paroian, the CEO of crypto hedge fund ARK36, has made a statement regarding the new European rules. “The lack of a minimum threshold for transactions to which the Travel Rule will apply as well as the application of the rule to interactions with self-hosted wallets will, without a doubt, be considered equivalent to an invasion of financial privacy.“, he explained.
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