- Experts deny outright ban on anonymous crypto wallets, clarifying focus on regulated entities and KYC/AML procedures.
- New legislation sparks debate on the balance between financial security and preservation of individual rights in the EU.
The European Union has decided to implement a series of regulatory measures in the field of cryptocurrencies, particularly regarding anonymous payments. On March 19, a majority of the European Parliament’s main committee voted in favor of restricting payments to managed digital wallets without identifying the owners of self-custody wallets. This measure is part of a broader effort to combat money laundering across the continent.
The European Union now bans the use of unidentified self-hosted cryptocurrency wallets for cryptocurrency payments of any size, according to Finbold. A majority of the EU Parliament's leadership committee approved the ban on March 19. The new anti-money laundering law prohibits…
— Wu Blockchain (@WuBlockchain) March 23, 2024
The legislation states that cash payments exceeding €10,000 will be banned, as well as anonymous cash payments greater than €3,000. The restriction on the use of cryptocurrencies will focus on transactions from unidentified self-custody wallets to service providers. These rules will reportedly come into full application three years after enactment, although full implementation is anticipated sooner than usual.
Related: Kuwait bans cryptocurrencies and virtual assets
Patrick Breyer, a member of the European Parliament and representative of the Piraten Partei party, has expressed skepticism about the effectiveness of these laws in preventing crime. According to Breyer, banning anonymous payments might not have a major impact on reducing crime, but it would limit the financial freedom of citizens who are not involved in illicit activities. Breyer emphasizes the importance of preserving the right to make payments and donations anonymously online, without the personal transactions of each individual being recorded.
EU Committee approves:
🚫Prohibition of cash payments over €10,000
🆔Prohibition of anonymous cash payments over €3,000
₿ Prohibition of anonymous crypto payments to hosted wallets without any thresholdThis means war on cash and gradual erosion of our financial freedom!… pic.twitter.com/gwznD4QZop
— Patrick Breyer #JoinMastodon (@echo_pbreyer) March 21, 2024
In addition, Breyer warns of the potential negative effects that phasing out cash could have on the economy and society. Reliance on banks could increase significantly, which in turn could lead to negative interest rates and tighter control of money flow by financial institutions.
Resistance to a ban on cash payments is not a new phenomenon in Europe. Breyer recalls an episode in 2017, when a public consultation on limiting cash payments generated strong opposition from the public. More than 90% of the participants in the consultation expressed themselves against the measure, valuing anonymous cash payments as a fundamental personal freedom.
Also read: Kuwait bans cryptocurrencies and virtual assets
Importantly, despite the concerns expressed, claims of a total ban on anonymous crypto wallets have been refuted.
Patrick Hansen, an industry expert, clarified that the new AMLR does not focus exclusively on cryptocurrencies, but establishes a broader framework of action affecting various obliged entities, including crypto asset service providers (CASPs).
1/ Yesterday was a prime example of why crypto Twitter (and often crypto media) should not be trusted when it comes to crypto policy. Let's debunk claims that the EU is banning anonymous crypto transactions or self-custodial wallets.
Here is what’s actually in the EU Anti Money… pic.twitter.com/dsNZQzl9Mx
— Patrick Hansen (@paddi_hansen) March 24, 2024
This regulation requires these providers to comply with know-your-customer and anti-money laundering (KYC/AML) procedures, but introduces no new restrictions on self-custody payments, wallets or peer-to-peer transfers.
The new EU money laundering and cryptocurrency legislation marks a step forward in the effort to regulate the digital financial space, with the aim of strengthening security and preventing illicit activities, although it generates debate about the balance between security and financial freedom.
