The European Union voted today on a law that will outlaw anonymous cryptocurrency transactions on crypto exchanges. The law includes self hosted wallets and applies to transactions of any amount. Both senders and recipients of crypto must be verified by EU crypto asset service providers.
The law comes packaged inside anti-money laundering revisions to the European Union’s Transfer of Funds Regulation (TFT). It incorporates provisions that applied to standard transactions of 1000 EUR or over to the cryptocurrency sector as well. The vote was won by a small margin with small compromises ensuring its passage.
How the law effects the crypto sector
The law came with objections from several crypto exchanges including Coinbase. Paul Grewal, Coinbase’s Chief Legal Officer argued that the law may undermine self-hosted wallets and open a “surveillance regime” against cryptocurrency exchanges including Coinbase. He also stated that the new identity verification standards for the unhosted wallets would be almost impossible to accommodate by crypto exchanges. He said it requires that they attain data from other parties outside their own customers.
The discussion and creation of additional crypto related regulations has grown recently since recent events like the Russian invasion of Ukraine as well as the Canadian Freedom truck convoy. In both cases it was reported that Bitcoin, Ethereum and other cryptocurrencies were used to fund or evade detection of funding raising eyes in the financial sector. Many crypto defenders point to crypto’s huge role in funding the Ukrainian forces and people via cryptocurrency donations and how it has been integral to their survival and success so far.