There is a possibility that the European Union (EU) may place a ban on regulated financial institutions and digital asset service providers from dealing with cryptocurrencies that promote users’ privacy like Monero, Zcash, and Dash. A leaked draft of an EU Anti Money Laundering (AML) bill incited this discussion about ‘privacy coins’ among crypto players.
Specifically, this plan is from officials of the Czech Republic who are currently driving discussions with the governments of the EU region to adopt the proposed legislation. According to CoinDesk, it is already being circulated to other twenty-six states in the region in expectation of comments either in support or otherwise.
The draft outline stated, “Credit institutions, financial institutions, and crypto-asset service providers shall be prohibited from keeping …anonymity-enhancing coins.” This legislative draft was first proposed in July last year by the European Commission as part of a strategy to mitigate criminal attacks on the financial system in the EU region.
Markedly, the European Commission strategically planned to boost AML laws, upgrade the means of detecting suspicious transactions, and bridge the gaps in the present regulatory framework for digital assets that bad actors leverage to carry out their attacks. Included in this draft is the plan to also launch a new anti-money laundering agency (AMLA).
EU Seeks to Mitigate Cyber Crimes
A statement from an EU diplomat implies that the decision is coming at this time to prevent the ‘risk stemming from crypto assets that are specifically designed to avoid traceability.’
As intended by Czech officials, digital assets service providers will be expected to conduct due diligence on their customers and ensure that they are verified before any transaction is approved. This rule applies even for occasional transactions which are below 1,000 Euro approximately $1,040. This negates banks’ strategy of only conducting due diligence for larger transactions.
Moreso, for larger settlements, the nature and the purpose of the business will be duly stated. The EU’s Markets in Crypto Assets Regulation (MiCA) which is another regulatory framework for crypto assets is still getting fine-tuned for release.
Meanwhile, Seychelles-based cryptocurrency exchange Huobi Global delisted several privacy coins in September as it fell under pressure from crypto market watchdogs.