Will the EP prohibit transactions using private wallets?
There are debates taking place in the European Parliament on the regulation of the cryptocurrency market. New rules could deprive private wallet users of the right to carry out transactions using them.
Regulations in the cryptocurrency market
Recently, the European Parliament voted to remove a controversial provision from the EU’s MiCA Directive that could ban proof-of-work (PoW) cryptocurrencies. Implementing this regulation would have been disastrous for the industry. However, it turns out that this is not the end of the adversity.
On March 31, the EP will vote on a new regulatory proposal to combat money laundering. The current Financial Transfers Regulation (AML) may be expanded to include regulations relating to cryptocurrency transactions.
In reality, this means a prohibition on using private wallets to carry out transactions.
A new controversial project
Patrick Hansen, a representative of Unstoppable DeFi, warned the public about the consequences of implementing new regulations. Cryptocurrency service providers would not only have to collect personal data of users transacting with each other using private wallets (which they already have to do) but also verify the accuracy of the information obtained. It goes without saying that such verification could pose several serious difficulties or simply prove impossible.
Even if the EP were to formulate strict guidelines for verification procedures, the costs for cryptocurrency companies to comply would be so great that it would not be worthwhile for smaller companies to continue their business. This, in turn, would foster a progressive centralization of the market. So it’s possible that cryptocurrency service providers will be forced to stop handling private wallets under the new regulations.
The regulatory proposal would require service providers to inform “competent anti-money laundering authorities” of any transaction exceeding €1,000. If that wasn’t enough, within a year of the bill’s approval, the European Commission would assess whether additional Regulations targeting criminal activity will be necessary. This could mean further restrictions on cryptocurrency users.