Transfer of Funds Regulation

Ensuring transparency in cryptocurrency transactions across the EU

The new EU Transfer of Funds Regulation (TFR) came into effect on December 30, 2024. It introduces measures to enhance the traceability of cryptocurrency transactions, aiming to combat illegal activities such as money laundering and terrorist financing and to create a secure environment for transferring digital assets.

This page explains the key aspects of the regulation and what it means for you.

What does the TFR require from crypto service providers?

To comply with the TFR, crypto service providers within the EU must implement the following measures:

  • Verification of sender and recipient data: Providers must collect and verify customer information, including names, addresses, and dates of birth, to ensure identity confirmation for cryptocurrency transactions.

  • Secure storage of transaction data: All collected data must be securely stored and retained for a specified period. Authorities can access this data if suspicious activities are identified.

  • Reporting obligations: Suspicious or unusual transactions must be reported to the relevant authorities.

  • Compliance programs: Providers must establish effective risk management and compliance structures to meet regulatory requirements.

These measures aim to foster a safer and more transparent digital financial ecosystem.

How does the TFR affect customers?

As of December 30, 2024, all crypto service providers in the EU must adhere to additional regulatory requirements. This means that providing specific information is necessary when transferring cryptocurrencies:

  • Proof of ownership for self-hosted wallets:
    For transactions over €1,000 to or from a self-hosted wallet, you must prove that the wallet belongs to you. This verification is conducted digitally and must be completed annually.

  • Transfers to other service providers (CASPs):
    Transfers to other crypto service providers are currently not available for private customers due to technical limitations.

  • Data accuracy:
    Regularly check your personal data to avoid transaction delays. Updates can be made quickly and securely in your platform's account settings.

What is a self-hosted wallet?

A self-hosted wallet (also known as a “private wallet” or “unhosted wallet”) is a wallet where you have sole control over the private keys. Unlike wallets managed by third-party providers, you maintain full control over your cryptocurrencies.

What is a CASP?

CASP stands for Crypto Asset Service Provider. This includes companies like Tangany that offer services related to cryptocurrencies, such as custody, trading, or transfers. CASPs are required under the TFR to ensure the transparency and security of cryptocurrency transactions by collecting, storing, and sharing customer data as mandated by law.

What is proof of ownership, and how does it work at Tangany?

Proof of ownership confirms that a self-hosted wallet belongs to you. This is required for:

  • Single transactions over €1,000.

  • Multiple smaller transactions that cumulatively exceed this threshold.

Tangany primarily uses an automated wallet verification method, with the Satoshi Test serving as a backup option.

Automated Verification with AOPP

Wallet ownership is verified quickly and securely using the Address Ownership Proof Protocol (AOPP). Here’s how it works:

  1. Verification request: Tangany sends you a link to the AOPP portal via your preselected communication channel.

  2. Accessing the AOPP portal: Open the link and select your wallet provider in the portal.

  3. Wallet signature: Your wallet will prompt you to sign a message to confirm ownership of the wallet address:

  4. Mobile device: Scan the QR code displayed in the portal.

  5. Desktop: Click on the provided link to complete the signature.

  6. Verification completion: Once the signature is confirmed, the verification is complete, and the transaction can proceed.

Note: This method is only available if your wallet supports AOPP.

Backup: Satoshi Test

If AOPP verification is not possible, Tangany offers the Satoshi Test as an alternative method:

  1. Initiating the microtransaction: You transfer a small, predefined amount of cryptocurrency from your wallet to a Tangany-provided address.

  2. Verification: Once the transfer is received, ownership of the wallet is confirmed, and the microtransaction amount is credited back to your account.

Important notes for the Satoshi Test:

  • For ERC tokens, the verification is always conducted in Ethereum (ETH).

  • Blockchain fees must be covered by the wallet owner.

  • Ensure your wallet has sufficient funds to complete the microtransaction.

What information must be provided for cryptocurrency transactions?

To comply with the TFR, the following information may be required:

For withdrawals:

  • Cryptocurrency type and amount.

  • Destination address on the blockchain.

  • Confirmation that you are the beneficial owner of the recipient wallet.

  • Proof of ownership for transactions over €1,000.

For transfers to other service providers (currently unavailable), ensuring the accuracy of your account information is critical to prevent delays.

In specific cases, additional proof may be required:

  • Address discrepancies: If sender and recipient addresses differ technically, Tangany may request additional documentation, such as screenshots, to verify ownership.

  • Incomplete data from other service providers: If the receiving CASP fails to provide required data, Tangany will request the missing information. Transactions may not proceed if the data cannot be obtained in time.

Please check our FAQs or contact us if you have further questions about your crypto transfers under the TFR or require additional support.