REGULATIONS

Crypto Travel Rule
in

European Union

by

European Banking Authority (EBA)

🇪🇺
Travel Rule required from
Travel Rule regulation still pending

The European Union (EU) has led the way by developing a robust regulatory framework for crypto, The European Commission's Regulation of Markets in Crypto-assets, also known as MiCA. The EU sees the need for harmonized international AML/CFT rules–however, its regulatory output regarding cryptocurrency has been slightly slow and fragmented. As a result, various EU member states, such as Germany, Lithuania, Malta, and France, have taken matters into their own hands, developing their own rules and even passing legislation that mandated the Travel Rule before the European Union.   

On June 20, 2021, the European Commission published a proposal for regulating the transfers of funds and certain crypto-assets. This proposal recasts regulation EU 2015/847 and creates a new and more coherent AML/CFT regulatory and institutional framework for the crypto industry. 

Crypto Regulations in the European Union

Is cryptocurrency legal in the European Union?

Cryptocurrencies are legal across the European Union with individual member-state regulations. Cryptocurrency taxation varies from country to country, where some charge tax on derived earnings at rates of 0 to 50%. In 2015, the Court of Justice of the European Union ruled that exchanges between traditional currency and crypto or virtual currencies should be exempt from VAT (value-added tax) as cryptocurrencies constitute services rather than goods.


Are there AML crypto regulations in the European Union?

Yes. On June 20, 2021, the European Commission published a package of legislative proposals for regulating the transfers of funds and certain crypto-assets to protect EU citizens and the financial system from money laundering and terrorist financing. The legislative package included revising the 2015 Regulation on Transfers of Funds to trace transfers of crypto-assets (Regulation 2015/847/EU), creating a new and more coherent AML/CFT regulatory and institutional framework within the EU. 


Is the Crypto Travel Rule mandated in the European Union?

Yes. The Crypto Travel Rule is mandated in the European Union as of June 20, 2021. The European Commission published a proposal to regulate information accompanying transfers of funds and certain crypto assets, which called for consistency with the FATF Travel Rule. (p3 COM(2021) 241 final.)


Who is the Crypto Travel Rule Regulator in the European Union?

The European Banking Authority (EBA) is the cryptocurrency regulator in the European Union.


FATF Travel Rule requirements in the European Union

Are there licensing or registration requirements for VASPs in the European Union?

Currently, there are no licensing or registration requirements for VASPs on a European state level. However, VASPs operating in specific EU member states have registration requirements with their respective regulators, such as France's Autorité des Marchés Financiers (AMF), Germany's Financial Supervisory Authority (BaFin), and Italy's Ministry of Finance. Once VASPs are authorized or receive licenses granted by these regulatory bodies, they may operate under a single regime across Europe.


When does the Crypto Travel Rule go into effect in the European Union?  

According to the European Commission's proposal that recently mandated the Travel Rule, the regulation will enter into force on the 20th day after publication in the official journal. (pg 10)


Does the European Union permit a grace period to comply with the Crypto Travel Rule?

The recent European proposal for crypto regulations did not mention a grace period.


Complying with the FATF Crypto Travel Rule in the European Union


What is the minimum threshold for the Crypto Travel Rule in the European Union?

To send Travel Rule data, the EU has set a threshold of EUR 1000, in line with the FATF recommended guidelines. However, the following differences exist:

  • Batch transactions: the Travel Rule applies to transactions where an asset appears to be linked to other transfers that amount to EUR 1000. (2015/847 recital 16)
  • Originator and beneficiary names must be shared for transfers less than EUR 1000. (Article 15)

Read our assessment of the European Commission's recent Crypto Travel Rule proposal to learn more. 

What are the PII requirements for the Crypto Travel Rule in the European Union?

The Travel Rule data requirements in the EU are in line with FATF requirements. According to Article 14 of the recent legislative proposal, the following information must accompany the transfers of crypto-assets: 

1. The crypto-asset service provider of the originator shall ensure that transfers of cryptoassets are accompanied by the following information on the originator:
(a) the name of the originator;
(b) the account number of the originator, where an account is used to process the transaction;
(c) the originator's address, official personal document number, customer identification number or date, and place of birth.

2. The crypto-asset service provider of the originator shall ensure that transfers of cryptoassets are accompanied by the following information on the beneficiary:
(a) the name of the beneficiary;
(b) the beneficiary's account number, where such an account exists and is used to process the transaction.

Are there differences in customer PII requirements for cross-border transfers versus transfers within the EU?

Yes. According to 2015/847 recital 18, simplified information accompanying transfers of funds within the Union will suffice. PII for cross-border transfers within the EU should include:

  • The payment account number(s) or a unique transaction identifier, or
  • In the case that the transfer of funds is not is not tied to an account (non-custodial), the transfer should include originator and beneficiary address identifiers. 

Additionally, 2015/847 recital 19 stipulates differences in business information requirements when transferring crypto assets from the EU to outside of the EU. Transfers of crypto assets from the EU to outside the EU should include a Legal Entity Identifier (LEI.)


What are the non-custodial or self-hosted wallet requirements in the European Union?

The European Union's recent legislation requiring the Crypto Travel Rule does not comment on transactions between VASPs and non-custodial wallets

Why choose Notabene for Crypto Travel Rule Compliance in the European Union?

Gradually rolling out a staged approach to crypto Travel Rule compliance has never been easier. Notabene is the only end-to-end Travel Rule compliance solution that securely permits VASPs to share required PII before sending crypto transactions to any counterparty. Notabene helps European financial institutions and VASPs comply with the FATF's Recommendation 16 "Crypto Travel Rule" as required by the European Commission.

Last updated
October 1, 2021

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