Gushiken Yona
The European Union (EU) has implemented new regulations that effectively make any cryptocurrency transactions, regardless of their size, through anonymous, self-custodied wallets illegal. As whispers turn to talks, there’s growing speculation that this trailblazing move by the EU could spark a global trend, prompting countries around the world to follow suit and tighten their grip on the elusive world of crypto.
In a landmark decision that underscored its commitment to tightening financial regulations, the European Union (EU) has set the stage for a dramatic shift in the cryptocurrency landscape. By effectively imposing a ban on crypto transactions through non-custodial, unverified wallets, the EU is bolstering its arsenal in the ongoing battle against money laundering and other financial crimes.
This bold move, approved by a majority in the European Parliament’s leading commission on March 19, marks a significant step forward in the EU’s Anti-Money Laundering (AML) directives, showcasing a unified front against the veil of anonymity that has long shrouded digital transactions. The fundamental point of this regulation lies in its targeted approach towards self-custody wallets—be they operated via mobile, desktop, or browser applications—without adequate identification measures in place.
Designed to bridge the gap that has historically allowed for the anonymous transfer of funds, often exploited for illicit purposes, this measure is as strategic as it is comprehensive. The regulations introduce stringent thresholds, applying to both cash dealings exceeding 10,000 euros and anonymous crypto payments over the 3,000-euro mark.
In a recent flurry of reactions to the European Union’s controversial ban on anonymous crypto wallets, notable crypto investor and host of “The Wolf Of All Streets” Podcast Scott Melker has taken to X (formerly Twitter) to express his surprise and concern over the lack of uproar from the cryptocurrency community. “Our industry should be screaming about this from the mountaintops, but I’m hearing barely a peep,” Melker voiced, highlighting the gravity of the EU’s decision to outlaw non-custodial wallets.
He warned that such regulatory measures in the EU might very well pave the way for similar attempts globally, suggesting a potential domino effect that could impact the freedom and anonymity traditionally associated with cryptocurrency transactions. Melker’s commentary raises critical questions about the future of digital finance and the potential for increased regulatory oversight worldwide, urging the crypto community to take a more vocal stand on such pivotal issues.
In a thoughtful response to the European Union’s ban on anonymous crypto wallets, Freddie New, the Head of Policy at Bitcoin Policy UK, shed light on the implications of the new regulation. New emphasized the importance of understanding the actual text of the legislation, pointing out that self-custody of cryptocurrencies remains legal, contrary to what some might fear.
The regulation, the lawyer clarified, aims to eliminate anonymity in crypto transactions rather than targeting the cryptocurrencies. He explained that users can still operate within the law by proving ownership of their crypto addresses, for instance, through the digital signature of a message, thus linking the wallet to their identity.
New also highlighted that the regulation will lead to more stringent customer due diligence checks for those moving their funds into or out of self-custody. However, he reassured the community that the coins and the act of self-custody are not under threat. “The prohibition does not apply to providers of hardware and software or providers of self-hosted wallets insofar as they do not possess access to or control over those crypto asset wallets,” New underlined, quoting the latest AML laws.
The lawyer also advised against panic, urging the community to consult the original legislative documents to fully understand the implications and to make informed decisions regarding their crypto assets.
