EU committees greenlight ban on hosted wallet crypto transactions without identification

A majority of the lead committees in the European Parliament have given their approval to a ban on cryptocurrency transactions made through hosted crypto wallets, regardless of their value. This decision comes as part of the European Council and parliament’s efforts to expand the coverage of the European Union’s Anti-Money Laundering (AML) and Counter-Terrorist Financing laws to include the cryptocurrency market.
According to Patrick Breyer, a member of the European Parliament for the Pirate Party of Germany, the new AML laws were approved by a majority of the EU Parliament’s lead committees on March 19. Breyer, along with Gunnar Beck of the Alternative for Germany party, were the only two members who voted against the ban on anonymous crypto payments. The ban specifically targets hosted or custodial crypto wallets provided by third-party service providers, such as centralized exchanges.
The new AML legislation imposes certain restrictions on cash transactions and anonymous cryptocurrency payments. It prohibits anonymous cash payments above 3,000 euros in commercial transactions and completely bans cash payments over 10,000 euros in business transactions.
It is expected that the new legislation will be fully operational within three years from its implementation. However, Dillon Eustace, an Irish law firm, predicts that it may become fully operational earlier.
Many cryptocurrency networks operate in permissionless environments, allowing anyone to create a cryptographic private key and have unrestricted and anonymous access to the system, which is a key principle of crypto.
Patrick Breyer expressed his opposition to the bill in a press release following the approval of the legislation by the lead committees. He argued that the bill compromises economic independence and financial privacy, and that he considers the ability to transact anonymously as a fundamental right.
The crypto community has had mixed reactions to the EU’s regulatory measures. Some believe that the new AML laws are necessary, while others are concerned about potential privacy infringements and restrictions on economic activity.
Daniel “Loddi” Tröster, 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 broader implications for cryptocurrency usage within the EU, expressing concerns about the potential stifling effect of the rules.