EU Enacts Ban on Unverified Self-Hosted Crypto Wallets
The European Union (EU) has implemented a ban on crypto transactions made through non-custodial wallets that have not been verified. This is part of the broader Anti-Money Laundering (AML) directives aimed at addressing financial crimes. The decision was approved by a majority of the European Parliament’s leading commission on March 19, indicating a unified stance against anonymous transactions.
The regulation targets transactions through self-custody wallets that lack proper identification, including those facilitated by mobile, desktop, or browser applications. The goal is to prevent the anonymous movement of funds, which can be used for illicit activities. The ban applies to cash transactions over 10,000 euros and anonymous cryptocurrency payments over 3,000 euros.
Cryptocurrency Market Faces Tight EU Regulations
The newly endorsed legislation is set to be fully implemented within three years of its official announcement. However, Dillon Eustace, an Irish law firm, predicts a faster implementation, leading to significant changes in the cryptocurrency market. The EU’s strict regulations on cash and anonymous crypto transactions are expected to have a considerable impact on financial operations in the region.
There has been resistance to the legislation, particularly from German MEP Patrick Breyer and Gunnar Beck of the Alternative for Germany party, who voted against it. They argue that the regulations violate financial privacy and autonomy by limiting the right to engage in anonymous transactions, highlighting the ongoing debate between security and individual freedoms.
Crypto Rules Raise Privacy and Use Concerns
The cryptocurrency sector has raised concerns about the EU’s new regulatory measures. Daniel “Loddi” Tröster, host of the Sound Money Bitcoin Podcast, emphasized the potential challenges introduced by the legislation, including its impact on personal financial privacy and the broader use of cryptocurrencies within the EU. Concerns were also raised about the effects on donations and the general use of digital currencies.
Despite the restrictions, self-custody transactions are not covered by the new regulations. This nuanced approach aims to prevent misuse while preserving the freedoms provided by cryptocurrency networks. The response from the crypto community has been mixed, with some acknowledging the need for AML laws and others fearing potential overreach that could impact privacy and economic liberty.
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