In a significant development shaping the regulatory landscape of the European Union (EU), a majority of the European Parliament’s lead committees have endorsed a ban on cryptocurrency transactions made through hosted crypto wallets without identity verification. This decision comes as part of the EU’s broader efforts to enhance Anti-Money Laundering (AML) and Counter-Terrorist Financing laws, extending regulatory oversight to the cryptocurrency market.
According to a recent post by Patrick Breyer, a member of the European Parliament representing the Pirate Party of Germany, the majority of the EU Parliament’s lead committees voted in favor of the new AML laws on March 19. The approved legislation specifically targets hosted or custodial crypto wallets provided by third-party service providers, such as centralized exchanges, aiming to mitigate the risks associated with anonymous cryptocurrency transactions.
Under the newly endorsed AML legislation, certain limits are imposed on cash transactions and anonymous cryptocurrency payments. Notably, anonymous cash payments exceeding 3,000 euros in commercial transactions and 10,000 euros in business transactions will be prohibited. The regulations seek to enhance transparency and accountability within the cryptocurrency ecosystem, aligning with broader efforts to combat illicit financial activities.
Despite the majority support for the regulatory measures, dissenting voices have emerged, with Breyer and Gunnar Beck of Alternative for Germany voting against the ban on anonymous crypto payments. Breyer expressed concerns over the potential compromise of economic independence and financial privacy, highlighting the fundamental right to transact anonymously.
While the new legislation is slated to become fully operational within three years from its entry into force, some anticipate an expedited timeline for implementation. However, the regulatory changes have sparked a debate within the crypto community, with divergent views on the necessity and implications of the AML laws.
Daniel “Loddi” Tröster, host of the Sound Money Bitcoin Podcast, emphasized the practical challenges and consequences of the regulatory framework, particularly about donations and broader cryptocurrency usage within the EU. Concerns have been raised regarding the potential stifling effect of the regulations on innovation and economic activity.
As the EU moves forward with implementing stricter AML measures, the crypto industry awaits further clarity on the regulatory landscape and its impact on privacy, financial inclusion, and technological innovation within the region.