EU Parliament Passes Rules To Ban All Anonymous Crypto Transactions

March 31, 2022 8:40 pm Comments

In the European Union, the controversial proposal to ban all anonymous crypto transactions which would invade all privacy rights has been passed by the EU parliament.

This happened despite the heavy criticism from the crypto community that stated that this infringes upon the privacy rights of the citizens and would stifle crypto innovation.

Supposedly, the proposal says that its purpose was to prevent money laundering risks which lawmakers thought should be extended to the crypto sector.

Additionally, the rules requires reporting for even the smallest crypto transactions which many would consider unnecessary and is including transactions from self-hosted wallets.

CoinDesk reports:

The proposals are intended to extend anti-money laundering (AML) requirements that apply to conventional payments over EUR 1,000 ($1,114) to the crypto sector.

They also scrap the floor for crypto payments, so payers and recipients of even the smallest crypto transactions would need to be identified, including for transactions with unhosted or self-hosted wallets.

Further measures under discussion could see unregulated crypto exchanges cut off from the conventional financial system.

National governments said in December they wanted to scrap the EUR 1,000 threshold for crypto, on the basis that digital payments can easily circumvent the limit, and to include private wallets that aren’t operated by regulated crypto asset providers.

Members of the center-right European People’s Party (EPP) opposed many of the more controversial changes, condemning what they called a “de facto ban of self-hosted wallets.”

The spokesperson for the European People’s Party (EPP) announced that this new rule will ultimately make Europe behind other regions when it comes to regulations that encourage crypto innovation.

Essentially, the proposal did not make sense at all and also not practical as such a large ban would be hard to enforce.

The ban would also affect crypto service providers that are considered “non-compliant” with the regulations by restricting crypto transfers to these firms.

Examples of businesses affected would be crypto exchanges and payment processors that deal with crypto which would have to abide by the rule in order to remain compliant.

Whether these new rules that prevent anonymous transactions will be a significant impact on crypto users within Europe is still unknown given that p2p transactions will likely still happen even if the rules passed gets approved to become law.

Yahoo reports:

The Thursday vote came in spite of objections from major industry participants, such as Coinbase, and from legal experts who warned that overly heavy handed privacy violations could face legal challenges in EU courts.

Under the new rules, Coinbase would have to report to the authorities any time a customer received over EUR 1,000 of crypto from a self-hosted wallet, the exchange’s CEO Brian Armstrong warned in a tweet posted Wednesday.

The plans must also be agreed on by both the parliament and national ministers, who meet as the EU Council, in order to pass into law.

Bitcoin’s price dropped about 2% in minutes as the vote came through, falling from $47,500 to $46,400.

Although the news did cause some worry for investors in the short term, the rules have not been passed into law yet as it also needs approval from the national ministers.

Short term price may likely be affected, but long-term growth is still expected given that the crypto industry has had a history of continuing to grow exponentially despite regulatory setbacks.

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