The European Union (EU) has recently implemented a regulatory change that prohibits the use of unidentified self-custody crypto wallets for cryptocurrency transactions of any value. This update is part of the EU’s Anti-Money Laundering (AML) regulations that have been recently introduced.
On March 19, the majority of the EU Parliament’s lead commission endorsed this prohibition, as stated in a post by Patrick Breyer, a member of the European Parliament for the Deutsch Piraten Partei. It is worth noting that Dr. Breyer and Gunnar Beck, a Parliament member representing the Alternative for Germany (AfD) party, were the only two leaders who opposed this approval. The ban specifically applies to unregistered wallets provided by service providers, including mobile, desktop, or browser applications.
The new Anti-Money Laundering legislation also includes restrictions on cash transactions and anonymous cryptocurrency payments. Cash transactions exceeding €10,000 and anonymous cash payments over €3,000 will now be considered illegal under these regulations.
These approved laws are expected to be fully operational within three years from their implementation. However, Dillon Eustace, an Irish law firm, predicts that these laws will be enforced earlier than the usual timeline.
Cryptocurrency networks are known for their permissionless nature, allowing anyone to create a private key and access the system without restrictions. This core principle of cryptocurrencies promotes inclusivity, freedom, and fairness in the financial system, without discrimination against users in any form.
The recent approval of the regulatory measures by the EU has been met with criticism from experts and advocates of financial freedom and human rights. German MEP Patrick Breyer opposes the bill, stating that it compromises economic independence and financial privacy. He believes that the ability to transact anonymously is a fundamental right.
The crypto sector, which places great importance on privacy and decentralization, has responded with mixed reactions to the EU’s regulations. Some believe that the new AML laws are necessary, while others express concerns about privacy infringement and potential hindrance to economic activity.
Daniel “Loddi” Tröster, host of the Sound Money Bitcoin Podcast, highlights the practical challenges and consequences of the recent legislation. He specifically mentions the impact on donations and the broader implications for cryptocurrency use within the EU. Tröster raises concerns about the stifling effect these rules may have, although it’s important to note that self-custody to self-custody transactions are not affected by the new law.