- As part of its larger efforts to combat money laundering, the European Union Parliament has outlawed the use of anonymous self-custody cryptocurrency wallets for transactions within the region.
- The ban focuses on self-custody wallets across multiple platforms and anonymous cash transactions exceeding €3,000.
- Opponents have claimed that the prohibition will impede financial privacy and unfairly impact law-abiding citizens.
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By prohibiting the use of anonymous cryptocurrency wallets for cross-regional payments, the European Union Parliament has made a huge advancement.
The majority of the parliament’s leadership committee approved the ban on March 19, according to a recent social media post by EU Parliament member Patrick Breyer. This action falls under the larger umbrella of EU anti-money laundering (AML) regulations.
The Impact of Europe’s New AML Regulations on Cryptocurrency
The new rules prohibit any cash transactions over a specific amount and all anonymous cryptocurrency payments. In particular, they forbid anonymous cash transactions exceeding €3,000 or cash payments exceeding €10,000. Self-custody wallets on desktop, mobile, and web apps are also prohibited.
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The new rules prohibit any cash transactions over a specific amount and all anonymous cryptocurrency payments. In particular, they forbid anonymous cash transactions exceeding €3,000 or cash payments exceeding €10,000. Self-custody wallets on desktop, mobile, and web apps are also prohibited.
The law is supposed to go into effect in three years, but there are hints that it might happen sooner.
However, the new law is expected to change how Europeans use virtual currencies. Its strong stance against anonymity has also given rise to concerns about user privacy and financial inclusivity. Furthermore, the regulation might seriously obstruct innovation and prevent the region’s widespread adoption of cryptocurrencies.
Crypto Community Raises Concerns Over the EU’s Prohibition of Anonymous Transactions
Breyer also voiced worries that increased monitoring of financial transactions might unintentionally encourage hacker activity and infringe upon personal liberties.
“We need to find ways to bring the best features of cash into our digital future. We also have the right to be able to pay and donate in cryptocurrencies online without our payment behavior being recorded for no reason and personally. If the EU believes it can regulate virtual currencies on its own, it has not understood the global internet,” Breyer said.
Members of the cryptocurrency community have also expressed doubts and concerns about the extent of the prohibition on anonymous payments. Specifically, one user wanted to know if all cryptocurrencies would be prohibited or just those classified as privacy coins.
Notably, a number of cryptocurrency exchanges, such as Binance and OKX, have removed a number of tokens with a privacy focus from their European user bases.
Patrick Hansen, Director of Research and Policy at Circle, clarified that payments from self-custody wallets were not prohibited. Furthermore, the regulation expressly excludes peer-to-peer transfers.
“Paying with crypto (for example to merchants) with a non KYC’d self custody wallet will be more difficult/banned depending on the merchants set up. This change, as well as the lower thresholds for anonymous cash payments, has unfortunately been agreed months ago,” he added.
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