The EU Parliament Committees Has Passed Controversial Laws Prohibiting Anonymous Crypto Transactions
The EU Parliament members voted today in support of new strict laws calling for a crackdown on unhosted or non-custodial wallets. This is a disadvantage for European crypto privacy supporters.
The European Parliament Vote In Favor Of Anti Anonymous
On March 31, the ECON and LIBE committees voted to approve an anti-money laundering and crypto-asset transfer proposal that might have serious consequences for crypto-related businesses and investors in the European Union. Despite close votes on the modifications to the Transfer of Funds Regulation, the final draft was overpoweringly approved.
The new rules would force crypto service providers, including exchanges, to collect the personal information of individuals who trade more than 1,000 euros of cryptocurrency using self-hosted wallets before allowing the transfer. Self-hosted wallets are ones that are not held by a third-party intermediary, such as Trezor, Ledger, or MetaMask.
The vote today follows a heated argument among lawmakers and people of the crypto community about whether non-custodial wallets should be subject to the know-your-customer (KYC) regulation, which requires companies to gather personal information about wallet users.
The proposed legislation will now go through trilogue talks between representatives of the European Parliament, the European Council, and the European Commission, which could begin as early as mid-April. This will provide an opportunity for the controversial law to be challenged and revised.
Unsurprisingly, the proposed rules have drawn the ire of the crypto community. Brian Armstrong, the CEO of San Francisco-based crypto exchange Coinbase noted that the legislation is “anti-innovation, anti-privacy, and anti-law enforcement.” He added that the proposal essentially treats cryptocurrency differently from fiat currency.
Tether and Bitfinex CTO Paolo Ardoino were disappointed that the plan was approved on Thursday, claiming that it “represents a big step back for human rights.” He hopes the final vote on the draft can consider the potential privacy breaches and security risks that could ensue if it’s enacted into law.
Some lawmakers are also opposed to the proposed regulations. Markus Ferber, the economic spokesperson for the European People’s Party (EPP) agrees AML checks in crypto should be taken seriously, but suggested that the new rules are commensurate to an outright ban on self-hosted wallets.
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