Today is not a good day for cryptocurrencies in Europe. Under the guise of anti-money laundering legislation, the European Parliament today voted on a series of measures to ban anonymous crypto transactions.
Cryptocurrencies are treated more strictly than banks
These new rules still need to be approved by the European Council before they become new legislation. If that were to happen, in practice this means that both the recipient and the sender of the crypto must be identifiable. With euro payments this is only necessary with an amount of 1000 euros, with cryptocurrencies this applies to all transactions.
Therefore, the European Parliament has chosen to tackle the cryptocurrency sector even more, because it is easier to send much smaller transactions to one address, which together can also reach that minimum amount.
best boy in the class
Basically, these rules mean that you must be able to prove at all times who you are sending crypto to, even if it is a transaction to a non-custodial wallet (where you manage your own private key).
This is similar to what Wopke Hoekstra implemented during his tenure as Minister of Finance of the Netherlands. In our country, users of crypto platforms must prove where they send their coins, with a screenshot of the recipient’s wallet (read: their own wallet). A complete farce, of course, because after that you can send the coins anywhere.
Compulsory license in the EU
Other measures discussed could lead to unregulated crypto exchanges becoming disconnected from the mainstream financial system.
In addition, a bill is being discussed today. It is about stopping unregulated crypto companies, including international companies that are not licensed in any of the EU jurisdictions.
Paul Grewal, a lawyer for Coinbase, says of these new rules:
“This review would unleash a full surveillance regime on exchanges like Coinbase, stifling innovation, and undermining the self-hosted wallets people use to securely protect their digital assets.”
He goes on to say that this goes against the principles of other EU laws:
“Requiring extensive data collection through exchanges, verification and non-customer retention goes against the basic EU data protection principles of data minimization and proportionality.”
Prohibit proof of work off the table
On March 14, the European Parliament voted on the so-called Proof-of-Work ban on the Markets in Crypto Assets (MiCA) directive. With 32 votes against and 24 votes, the EU seemed to opt for innovation for a while, because Bitcoin and other proof-of-work currencies were not banned in Europe.
Still, EU analyst Patrick Hansen says the battle to be waged from today will be tougher than countering a PoW ban.
There is still hope, after today’s vote, the proposal will be announced in plenary, probably sometime in April. This can still be challenged, but if not, a debate on the issue will take place between the European Parliament, the EU Commission and the Council.