The European Union (EU) has recently implemented a regulatory change that prohibits cryptocurrency transactions made through unidentified self-custody crypto wallets, regardless of their value. This update is part of the EU’s new Anti-Money Laundering (AML) regulations.
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 representing the Deutsch Piraten Partei. It is worth mentioning that Dr. Breyer was one of the two leaders who opposed this approval, with Gunnar Beck, a Parliament member from the Alternative for Germany (AfD) party, being the other. The ban specifically applies to unregistered wallets provided by service providers, including mobile, desktop, or browser applications.
The recent Anti-Money Laundering legislation also includes specific restrictions on cash transactions and anonymous cryptocurrency payments. Transactions involving cash exceeding €10,000 and anonymous cash payments over €3,000 will be considered illegal under these regulations.
It is expected that the approved laws will be fully operational within three years of their implementation. However, Dillon Eustace, an Irish law firm, anticipates that these laws will be enforced earlier than the usual timeline.
Cryptocurrency networks typically operate in permissionless environments, allowing anyone to create a cryptographic private key and gain unrestricted access to the system. This characteristic is a fundamental principle of cryptocurrencies, providing a more inclusive, liberated, and fair financial system that does not discriminate against users in any way.
The recent approval of these regulations has been met with criticism from experts and advocates of financial freedom, who believe that it infringes upon fundamental human rights. German MEP Patrick Breyer opposes the bill, arguing that it compromises economic independence and financial privacy, stating that the ability to transact anonymously is a fundamental right.
The crypto sector, which places a strong emphasis on privacy and decentralization, has responded critically to the EU’s regulatory measures. While some believe that the new AML laws are necessary, others fear that they may impede on privacy and hinder economic activity.
Daniel “Loddi” Tröster, the host of the Sound Money Bitcoin Podcast, highlighted the practical challenges and consequences of the recent legislation. He discussed the impact on donations and the wider implications for cryptocurrency use within the EU, expressing concerns about the potential stifling effect of these rules. It is important to note that the new law does not affect self-custody to self-custody transactions.
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Patrick Breyer