Controversial European Union legislation to ban anonymous crypto transactions got approved. Lawmakers are preparing to prohibit even the tiniest anonymous cryptocurrency transactions, and they are considering steps that might result in the closure of unregulated cryptocurrency exchanges.
CoinDesk looked at records and found that more than 90 lawmakers were in favour of the plan. It is hoped that the measures would expand AML regulations that now apply only to conventional transactions exceeding EUR 1,000 ($1,114) to the crypto industry.
Cryptocurrency payments are also scraped to the ground, which means that even the tiniest transactions would need to be traced, even if they were made via unhosted or self-hosted wallets.
Brian Armstrong, CEO and co-founder of Coinbase, shared his views on the matter on Twitter.
5/ Moreover, any time you receive 1,000 euros or more in crypto from a self-hosted wallet, Coinbase will be required to report you to the authorities. This applies even if there is no indication of suspicious activity.
— Brian Armstrong (@brian_armstrong) March 30, 2022
Unregulated cryptocurrency exchanges are no longer permitted
Further steps are being discussed which could shut unregulated crypto exchanges off from the mainstream banking system as a result.
Since digital payments may easily evade the EUR 1,000 limitation, national governments announced in December that they sought to remove it, as well as cover private wallets that aren’t run by licenced crypto asset providers.
The European Parliament’s ECON and LIBE committees voted in favour of a proposal that would mandate the collection of personal information from people who use so-called “unhosted” crypto wallets to make transactions of at least $1,000.
Despite a few close calls, the final version was accepted by a wide margin. In order to become law, the legislation must first be approved by the European Parliament, Commission, and Council of the EU. It’s unlikely that this will derail the law, though.
Transfer of fund regulations
As a result of the change, the cryptocurrency business is now subject to the Transfer of Fund Regulations (TFR), which are designed to keep payment networks free of money laundering.
There is no lower bound for crypto transfers in the draught, so all transactions are subject to identification checks. This means that the parties engaged in a transaction will be required to provide and disclose their personal information.