EU Bans Cryptocurrency Transactions via Unidentified Wallets Amidst Anti-Money Laundering Efforts
Summary:
The European Union has banned cryptocurrency transactions through unidentified self-hosted wallets as part of revised Anti-Money Laundering regulations. The ban extends to unregistered wallets offered by service providers and includes mobile, desktop, or browser-based applications. The rules have met with mixed reactions in the cryptocurrency sector known for its focus on privacy and decentralisation. Notably, transactions from self-custody to self-custody wallets are not affected by the new regulation.
The European Union (EU) recently revised its regulations to ban cryptocurrency transactions carried out via anonymous self-hosted crypto wallets. The move comes as part of an effort to strengthen Anti-Money Laundering (AML) measures across the bloc. Patrick Breyer, a European Parliament member for the German Pirate Party, revealed that the rule was largely supported by the EU Parliament’s main committee on March 19. Breyer, along with Gunnar Beck from the Alternative for Germany (AfD) party, were the sole opposing votes.
This prohibition pertains specifically to unregistered wallets provided by service companies, including those provided through mobile, desktop or web-based apps. In line with the latest AML directive, cash transactions above €10,000 and unidentified cash payments above €3,000 are now also unlawful.
The implementation of such laws is usually set for three years after formal acceptance, but legal firm Dillon Eustace, based in Ireland, anticipates a faster execution timeline. A key feature of most cryptocurrency networks is their permissionless infrastructure, which permits individuals to generate their own cryptographic private key for unbounded access.
Related: The UK Treasury is establishing stronger AML measures through cryptocurrency oversight modifications.
This feature, intrinsic to cryptocurrencies, promotes an inclusive, free and fair financial system devoid of prejudice. Critics and advocates of civil liberties view this recent endorsement as a threat to financial freedom and basic human rights. German MEP Patrick Breyer disagrees with the legislation, arguing it poses a risk to financial privacy and economic autonomy, likening anonymous transactions to a basic right.
The crypto enterprise, known for advocating privacy and decentralisation, has voiced objections to the EU’s regulatory interventions. The industry has signalled a range of responses, with some endorsing AML laws as necessary, while others worry about potential breaches of privacy and suppressions of economic activity. Daniel "Loddi" Tröster, host of the Sound Money Bitcoin Podcast, highlights the potential difficulties and outcomes of the recent legislation, focusing on how it could affect donations and the wider implications for cryptocurrency use within the EU, expressing concerns regarding potential stifling effect of these new rules. Crucially, the new regulation does not affect transactions from self-custody to self-custody.
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Published At
3/23/2024 4:25:54 PM
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