Federal Ministry of Finance requires insight into crypto transactions



The government wants to fight hard against money laundering and terrorist financing. The Federal Ministry of Finance has now submitted a draft law that requires comprehensive information from those involved in the transaction. Senders and recipients of cryptocurrencies will probably have to pull out in the future.

As contradicting as it may seem, anonymity and transparency are two core properties of crypto transactions. All transfers can be traced back seamlessly via blockchain, while the network participants wrap themselves in the veil of the wallet address. From this apparent contradiction, the term pseudo-anonymity was used. But that could soon be over, at least in terms of anonymity. The draft law for the “Crypto Value Transfer Ordinance” by the Federal Ministry of Finance calls for a stricter duty of care on the part of all parties involved in the transaction.


Commit crypto transactions

Specifically, it is about the transmission of information “about client and beneficiary” – that is, from sender and recipient. Basically, the applicable law of conventional money transfers according to the Money Laundering Act is also applied to crypto transactions. These are to be tracked by the crypto value transfer regulation in the future, “in order to prevent misuse for purposes of money laundering or terrorist financing”, according to the Federal Ministry of Finance.

Financial crime with crypto currencies is to be pushed forward. The law calls for “the review of persons affected by sanctions and a more risk-oriented approach by the service providers involved”. For this, the draft takes all parties involved in the transaction into the obligation to deliver. If the transaction is not processed by a service provider, the sender and recipient are responsible for “ensuring that the names and addresses of those involved in the transaction are determined and stored”. The “obligated party” must also ensure that “the name and address determined are correct”.


Grace period until 2023

The draft basically defines all parties involved as parties to the transaction, from financial service providers to custodians to private individuals. With the exception of miners who “receive crypto values ​​in exchange for validating the transfer”.

The ordinance also stipulates that information on the beneficiary or client of a crypto value transfer must be collected and stored if the transfer is from or to an electronic wallet that is not managed by a crypto custodian (self-managed electronic wallet, “unhosted wallet”).

The far-reaching obligation to provide information and information security marks a turning point in the previously rather lax crypto regulation. The question, however, is what means should be used to control crypto transactions. It is very likely that the administrative apparatus will be expanded for this. The draft estimates the cost of the additional effort at 157,000 euros. However, the law could reach its limits, especially in the area of ​​decentralized finance or mixers that disguise transaction paths.

In addition, those affected still have a grace period. According to the draft, the regulation should only be evaluated by the end of 2023 and cast into a corresponding law. At least “unless a comparable regulation of the European Union has come into force by then”. Let the game of cat and mouse begin.




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