In a recent regulatory change, the European Union (EU) has prohibited cryptocurrency transactions of any value made through unidentified self-custody crypto wallets. This update is a component of the region's newly implemented Anti-Money Laundering (AML) regulations.
According to a post by Patrick Breyer, a member of the European Parliament for the Deutsch Piraten Partei, the majority of the EU Parliament’s lead commission endorsed the prohibition on March 19.
Notably, Dr. Breyer is one of the two leaders who opposed this approval. Gunnar Beck was the other Parliament member who voted against it, representing the Alternative for Germany (AfD) party. The ban on cryptocurrency payments applies specifically to unregistered wallets offered by service providers (hosted wallets), covering self-custody wallets provided via mobile, desktop, or browser applications.
The recent Anti-Money Laundering legislation specifically outlaws certain limits for cash transactions and anonymous cryptocurrency payments. Under these regulations, cash transactions exceeding €10,000 and anonymous cash payments over €3,000 will be deemed illegal.
The approved laws are expected to be fully operational within three years from their entry into force. However, Dillon Eustace, an Ireland law firm expects these laws to become fully operational before the usual enforcement timeline.
Fundamentally, many cryptocurrency networks function within permissionless environments, allowing anyone to create a cryptographic private key and granting unrestricted entry into the system.
Related: UK treasury seeks to improve AML through crypto supervision changes
This characteristic lies at the heart of cryptocurrencies’ fundamental principles, offering a more inclusive, liberated, and equitable financial system that does not discriminate against its users in any form.
Experts and freedom advocates consider this recent approval a hit against financial freedom and fundamental human rights. German MEP Patrick Breyer opposes the bill, claiming it compromises economic independence and financial privacy. He considers the ability to transact anonymously to be a fundamental right.
The crypto sector, known for its emphasis on privacy and decentralization, has responded critically to the EU’s regulatory measures. These new regulations have created mixed reactions, whereby some believe the new AML laws are necessary, while others fear they may infringe on privacy and hinder economic activity.
Daniel “Loddi” Tröster, the Sound Money Bitcoin Podcast host, underscored the practical hurdles and consequences of the recent legislation, elaborating on the impact on donations and the broader implications for cryptocurrency use within the EU. He articulated concerns over the stifling effect these rules might have. Notably, self-custody to self-custody transactions are not affected by the new law.
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