Key Takeaways
- The European Parliament will vote this week on proposed amendments to its anti-money laundering rules.
- Below the brand new guidelines, crypto exchanges could be required to gather and confirm KYC information on unhosted crypto wallets.
- Business consultants have criticized the brand new guidelines as an invasion of privateness and based mostly on “unhealthy info.”
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Crypto customers are going through one other regulatory hurdle within the EU, this time within the type of stringent buyer verification necessities, that are set to see a vote this week.
Know Your Buyer
The European Parliament is scheduled to vote by Thursday of this week on amendments to anti-money laundering legal guidelines that, if handed, would severely curtail the flexibility of crypto customers to function anonymously.
A draft report that incorporates the proposed amendments to the EU’s Switch of Funds Regulation (TFR) particulars that the brand new guidelines would additional regulate the way in which crypto exchanges are allowed to work together with noncustodial, unhosted wallets, which are sometimes held and operated anonymously.
Below present present rules, cryptocurrency exchanges are required to gather private information on transactions of €1,000 or extra to or from unhosted wallets. Below the brand new rules, nevertheless, exchanges won’t solely be required to gather private information on the homeowners of unhosted wallets with which they transact, however would even be required to confirm the accuracy of collected information earlier than transactions can proceed.
In response to some critics, this might place unreasonable burden on crypto exchanges and should result in their ceasing to do enterprise with unhosted wallets altogether. Patrick Hansen, head of technique and enterprise improvement, sounded the alarm in a tweet storm this weekend, writing “The consequence of this, imo, is that the majority crypto corporations received’t have the ability or prepared to transact with unhosted wallets anymore in an effort to keep compliant.”
The transfer seems to stem from the widespread concern amongst regulators that cryptocurrencies are used for illicit functions, together with cash laundering, financing for terrorism and arranged crime, and tax evasion. Nonetheless, business consultants have repeatedly identified the issue in utilizing cryptocurrency to successfully evade regulation enforcement.
In a blog post Sunday, Coinbase chief authorized officer Paul Grewal known as these notions “unhealthy info,” arguing that regulation enforcement is completely able to assessing and appearing upon such risks with their present capabilities and that the brand new rules merely represent an invasion of privateness.
The information of the proposed amendments comes on heels of one other shut name for the EU crypto neighborhood two weeks in the past, when a proposed ban to Proof-of-Work cryptocurrency mining was struck down in a vote.
Disclosure: On the time of writing, the writer of this piece owned BTC, ETH, and several other different cryptocurrencies.
