EU abandons plan to impose $1K payment limit on self-custody crypto wallets

A majority of the leading committees in the European Parliament have eliminated a 1,000 euro limit on cryptocurrency payments from self-hosted crypto wallets as part of new anti-money laundering laws. The European Union’s Economic and Monetary Affairs Committee and the Civil Liberties, Justice and Home Affairs Committee passed the Anti-Money Laundering Regulation (AMLR) on March 19, which had been provisionally agreed upon by the European Council and Parliament in January. The previous proposal that restricted businesses to 1,000 euros for transactions using a self-hosted crypto wallet was removed, along with a provision that aimed to implement identity checks on self-hosted wallets receiving funds. However, crypto exchanges, referred to as Crypto-Asset Service Providers (CASPs) in the EU, are required to perform identity verification checks on users who conduct business transactions of at least 1,000 euros. The law works in conjunction with other crypto-focused laws, such as the Markets in Crypto-Assets (MiCA) laws, to reinforce existing prohibitions on CASPs from providing accounts for anonymous users or privacy coins like Monero (XMR) that conceal transaction information. CASPs are also required to apply measures to transfers between their platform and self-custody wallets, which involve verifying the identity of the exchange wallet holder if funds from a self-custody wallet are sent. The laws limit cash payments to 10,000 euros, with EU member states able to set lower limits, and prohibit anonymous cash payments over 3,000 euros. The AMLR is expected to be fully operational by 2027, after receiving approval from the EU Council and the European Parliament plenary. Pirate Party Germany European Parliament member Patrick Breyer criticized the new laws, calling them a “war on cash” and arguing that they compromise economic independence and financial privacy. The crypto community has had a mixed response to the EU’s regulatory measures, with some believing the laws are necessary and others expressing concerns about privacy infringement and restrictions on economic activity. Daniel “Loddi” Tröster, host of the Sound Money Bitcoin Podcast, highlighted the practical hurdles and consequences of the legislation, including its impact on donations and cryptocurrency use within the EU, and expressed concerns about the potential stifling effect of the rules.