The European Union (EU) wants crypto trading to stop being a chaotic mess. EU negotiators published a provisional agreement that marks the bloc’s first rules regarding tracing transfers of crypto assets, clamping down on illicit transfers and suspicious transactions.

Despite what the crypto bros will tell you, cryptocurrency is not the safest investment on the market right now. In fact, not only is it one of the most volatile places to put your money in, but it’s also riddled with scams. But this doesn’t mean that crypto can’t play a role in our economy — just that it needs to be more closely regulated. At least that’s what the European Union believes.

Perhaps the most important part of the legislation is something that would force crypto trading platforms to store more data about transactions. When a crypto asset is passed from one person to another, information on both the sender and the receiver would have to be stored by the trading platforms if the amount is larger than the equivalent of 1,000 euros, and companies would be forced to hand this information over to authorities investigating things like funding terrorists or money laundering. This would subject cryptocurrency transfers to the same money-laundering rules as traditional banking transfers, aligning crypto transfers with “normal” money transfers. The rules won’t affect tokens without issuers, like bitcoin.

The European Securities and Markets Authority also announced that the new rules, known as Markets in Crypto-Assets (MiCA), will force trading platforms to warn consumers about the risk of losses associated with trading digital tokens.

This would also help protect some of the less savvy traders. When the lockdown came in, a new crowd of people went into trading, and while some people have made money with crypto, others have lost fortunes, either due to market prices, or due to scams. Many people new to trading didn’t even know what they were buying — they were doing copy trading or other automated trades, with little oversight.

“For too long, crypto-assets have been under the radar of our law enforcement authorities,” one of the lead EU lawmakers negotiating the rules, Assita Kanko, said in a statement. “It will be much harder to misuse crypto-assets and innocent traders and investors will be better protected.”

The decision was also fueled by concerns over consumer protection, especially as the value of bitcoin, the world’s largest cryptocurrency, has plunged more than 70% from its all-time high in a matter of months. A so-called stablecoin (a cryptocurrency where the price is designed to be pegged to a cryptocurrency) called TerraUSD imploded virtually overnight, erasing an estimated $40 billion in investor funds with no accountability.

This is just the first step in a sweeping package that aims to introduce a number of oversight measures and place some firm principles on the “wild west” of crypto trading. Additional measures are expected to be presented in the following weeks, but the whole package will be finished 18 months from now.

The effects of this move are expected to spill outside the continent and potentially become a global standard. Just like how the EU’s data privacy policy became the norm in many other parts of the world, the new crypto regulations are expected to be influential on other continents. Smaller countries that could find it difficult to draft legislation of this magnitude may also adopt and implement the packages (with minor tweaks).

But the EU will have a hard problem harmonizing the law between different countries. While Germany, for instance, has been very proactive in requiring companies that facilitate crypto assets on behalf of clients to take special precautions and obtain a specific license, other European countries have virtually no crypto legislation.

The measure was in the work for some time, but it was also accelerated by Russia’s invasion of Ukraine. As the sanctions against Russia broaden, the possibility of using crypto for evading sanctions also becomes more pressing, and EU legislators want to make sure that Russia can’t use crypto to keep funding its war.

Ultimately, it’s unsurprising that the EU wants a more conservative and responsible approach toward cryptocurrencies. The downside is that this will hamper the growth and ease of use of cryptos, but could provide a healthy, durable framework on which to ensure that cryptocurrencies finally have a positive effect in society — instead of just making money for some people and losing money for others.