EU Implements Stricter Regulations, Bans Anonymous Crypto Wallets

There are new legislative changes in the European Union (EU) which have now rendered cryptocurrency payments through unidentified self-custody wallets illegal across the continent. The legislative amendment is part of a comprehensive set of anti-money laundering (AML) laws targeted at enhancing financial transparency and combating illicit activities within the EU.

Majority Approves Anonymous Crypto Wallet Ban

The decision to prohibit cryptocurrency payments using anonymous wallets was approved by the majority of the EU Parliament’s lead commission on March 19, as posted on X by Patrick Breyer, a member of the European Parliament representing the Deutsch PiratenPartei.

This stance is in contrast to the position of EU legislators exactly a year ago when 418 members voted in favor of an EU-wide digital wallet. The anonymity of the wallets seems to have changed their position.

The legislative change at the European Parliament was overwhelmingly voted for with only two dissenting voices against the approval, namely Breyer, along Gunnar Beck of the Alternative for Germany (AfD) party.

Implications of Ban on Anonymous Crypto Wallets

The new anti-money laundering regulations also imposed certain thresholds for cash payments. Cash transactions exceeding €10,000 are deemed illegal. The same applies to anonymous cash payments exceeding €3,000.

Also worthy of note is the prohibition on payments made in cryptocurrencies through unidentified wallets operated by service providers (hosted wallets). This encompasses self-custody wallets accessible via mobile, desktop, or browser applications.

According to Dillon Eustace who is familiar with the approved AML package, it is scheduled to take effect three years from its enactment. However, legal experts are anticipating expedited implementation before the standard enforcement timeline.

Patrick Breyer has voiced skepticism regarding the efficacy of these laws in combating financial crimes. He maintains that anonymous payments are a fundamental human right essential for individual financial freedom. He warns against the potential negative economic and social consequences of restricting sovereign payments, cautioning against increased dependence on financial institutions and the erosion of privacy rights.

Crypto Regulatory Approaches in the EU

Despite this development, some E.U member countries like France recently embraced softer crypto licensing regulations. Lawmakers in January 2023 debated the enforcement of a mandatory licensing regime for crypto exchanges. The proposal received 61 votes in favor and another 33 against its implementation.

Historically, European citizens have expressed strong opposition to limitations on cash payments, citing concerns about personal freedoms and the perceived ineffectiveness of such measures in addressing criminal activities.

The new regulations imply that AnonExch, for instance, which offers privacy features and a user-friendly platform for crypto investors and enthusiasts worldwide, can no longer operate in the EU. This is because AnonExch provides complete anonymity in transactions.