Everything you need to know about the new EU regulation
In recent years, the regulation of cryptocurrencies (such as Bitcoin) has gained importance. One of the key new EU regulatory frameworks is the Transfer of Funds Regulation (ToFR), which aims to make crypto transfers, in addition to fiat transactions, more traceable.
This blog post explores essential aspects, covering everything you need to know about the Transfer of Funds Regulation.
What is the Transfer of Funds Regulation (ToFR)?
The Transfer of Funds Regulation (ToFR), also referred to as the Funds Transfer Regulation or Travel Rule, is an EU regulation that aims to improve traceability in both fiat and crypto transactions. It’s designed to enhance the transparency of financial transactions and combat money laundering and terrorist financing. Crypto service providers are required to collect, transmit, and store information on senders and recipients involved in crypto transfers (such as Bitcoin).
The EU’s aim is to make crypto transactions traceable, which aids in preventing, detecting, and investigating money laundering and terrorist financing. With this regulation, authorities can more quickly track suspicious transactions. The ToFR is part of the EU’s broader strategy for a digital financial ecosystem and will go into effect on December 30, 2024, aiming to protect you and the financial system from abuse.
What will crypto service providers have to do under the ToFR?
- Identification of sender and recipient: Crypto service providers must verify the identity of individuals transferring crypto. This includes details like names, addresses, or dates of birth.
- Data storage: Collected data must be securely stored and retained for a specified period. In cases of suspicion, authorities can access transaction records.
- Reporting obligations: Platforms must report unusual or suspicious transactions.
- Compliance and monitoring: Providers must have appropriate risk management and compliance programs to ensure adherence to regulations.
What changes for me as a BISON user?
Once the ToFR takes effect, BISON and other EU crypto providers will be required to implement several adjustments to meet the new requirements. When transferring crypto assets, you will need to provide additional information, such as:
- Is a self-hosted wallet involved in the crypto transfer?
For deposits and withdrawals exceeding €1,000 involving self-hosted wallets, you must verify ownership through a “proof-of-ownership” process. Ownership verification is required once per year and will be conducted digitally when necessary.
- Is another crypto provider involved?
For transfers to another CASP, you must inform us, as BISON will need to transmit additional personal data (e.g., your first and last name, address, or birthdate) to the other CASP. These details must be complete and accurate to ensure a smooth transfer. Please check your BISON profile under Settings > Profile to confirm your details are up to date.
What information will be required in the future?
For deposits:
- Proof-of-ownership if the transfer exceeds €1000 and involves a self-hosted wallet
- Sender information if the other crypto provider has incomplete data
For withdrawals:
- The cryptocurrency being transferred
- The amount
- The blockchain destination address
- Confirmation that you’re the beneficial owner of the recipient wallet
- Whether the transfer involves self-hosted wallet or another CASP
- Proof-of-ownership for transfers exceeding €1,000
What is proof-of-ownership?
How does proof-of-ownership work at BISON?
You can prove ownership of your private wallet by making a microtransaction, known as a Satoshi test. To do this, you transfer a predefined amount of crypto assets from your self-hosted wallet to a target wallet address specified by BISON. These are small amounts within a predefined range, randomly selected by BISON. For Bitcoin transfers, for example, the amounts range between 550 and 1550 Satoshi. You can find a list of Satoshi test ranges for each cryptocurrency here.
Important information: To ensure that the Satoshi test runs smoothly, make sure you maintain a sufficient amount of crypto assets in your private wallet for deposits and withdrawals, as specified in the Satoshi test ranges. The test is usually performed in the cryptocurrency you wish to transfer. For ERC tokens, however, the Satoshi test deposit is always performed in Ethereum (ETH). If you make a deposit or withdrawal request for more than 100% of your crypto assets, no microtransaction can be performed. In this case, you must top up your self-hosted wallet via another source, for example another self-hosted wallet, to be able to carry out the Satoshi test.
Once you have successfully transferred the crypto assets, this serves as proof of ownership of your private wallet. You will immediately see the transferred crypto assets in your BISON portfolio. The amount of the microtransaction required for the Satoshi test will be credited to your BISON app.
Please note:
- Any blockchain fees incurred during this microtransaction are your responsibility.
- The deposit or withdrawal process, including the Satoshi test, can take up to 5 business days.
Click on the video now to familiarise yourself with the Satoshi test at BISON for deposits.
Please note that the Satoshi test works the same way for withdrawals.
Have more questions?
For additional questions, please check our FAQs.
