Despite the ongoing criticism from the crypto industry, European Union lawmakers voted today in favor of controversial measures to outlaw anonymous crypto transactions. More than 90 lawmakers backed the proposal, but experts say the privacy-invading crypto rules would stifle innovation and jeopardize privacy.
For a long time, lawmakers have been claiming otherwise, saying the new rules will boost users’ confidence and support the development of alternative payment instruments and digital services.
The proposed measures would stringently speculate crypto firms to reveal crypto transfer records. Also, payers and receivers would then be identifiable for even the tiniest crypto transactions and payments, including transactions with self-hosted or unhosted wallets.
Further, the rules would also expand anti-money laundering (AML) requirements in the crypto space. These AML requirements would apply to conventional payments exceeding EUR 1,000 ($1,114). Consequently, users have to report such transactions to the authorities.
Additionally, these measures could potentially lead to a crackdown on unregulated crypto exchanges. A separate legal proposal was also discussed today that would stop transactions being made to “non-compliant” crypto service providers.
Under this, providers operating in the EU without authorization or established in any jurisdiction would also be restricted.
Markus Ferber, a member of the European People’s Party (EPP) showed his opposition to the proposal saying “We need to take AML risks in crypto seriously, but should not ban unhosted wallets,” he further added, “This would be the equivalent of banning cash – unnecessary and disproportionate!”
The chief legal officer at crypto exchange Coinbase also criticized the idea anticipating the upcoming EU vote, stating that measures like these would unleash an entire surveillance regime on exchanges like Coinbase, stifle innovation, and undermine the self-hosted wallets that customers use to securely protect their digital assets.
The new rules must also be approved by both the parliament and national ministers, who meet as the EU Council, in order to pass into law.
Last month, the European Union voted against a proposed ban on proof-of-work (Pow) cryptocurrencies such as Ethereum and Bitcoin. It seems like the EU is going to dive more into layers of the crypto industry in the unforeseeable future.
