Breaking: EU Passed New Crypto Regulation

TL;DR

A recent new EU encryption regulation has triggered public opinion on social media. On March 23, foreign media Finbold reported that according to the EU’s latest new anti-money laundering regulations, it is illegal to use any unidentified self-hosted crypto wallets for cryptocurrency payments of any size in the EU. The ban is part of a series of anti-money laundering laws introduced by the European Union in the past. Its main purpose is to combat criminal activities, terrorism, and tax evasion to a limited extent. This new anti-money laundering law specifically imposes specific thresholds for cash payments and any anonymous cryptocurrency payments.

For example, any anonymous cash payment over €10,000 will be considered illegal, while any anonymous cash payment over €3,000 will also be illegal. As stipulated in the law, the ban on cryptocurrency payments will specifically apply from unidentified self-custody wallets to service providers.

As soon as this new encryption rule came out, it caused an uproar in public opinion. Some respondents said that anonymous cash payments are a basic personal freedom and that the ban will have minimal effect on combating criminal activities. Some critics believe that this provision limits citizens’ financial autonomy to some extent. Some people have even compared this new encryption ban to the apocalyptic society described in the famous writer Orwell’s work “1984”.

Another general counsel, Freddie New, gave three detailed explanations of the new encryption regulations from another perspective on social media. He said, first of all, this is a ban on anonymity, not a ban on Bitcoin. If you can prove that you control the key to an address by signing a message, then the address is not anonymous and is tied to you. My understanding is that @Trezo and @SwissBitcoinPay are already working on user experience to implement this. Second, and the most obvious impact is the increased customer due diligence before you move in and out of self-hosting.

Finally, your self-custody tokens and self-custody itself are not affected. The wording clearly states in bold: “The ban does not apply to hardware and software providers or self-hosted wallet providers, as long as they do not have access to or control of these crypto asset wallets.”

On April 20, 2023, the European Parliament passed the EU’s first bill tracking the transfer of crypto assets such as Bitcoin with 529 votes in favor, 29 votes against, and 14 abstentions. The bill, agreed informally by European Parliament and Council negotiators in June 2022, includes combating market manipulation and financial crime. Ensure that cryptocurrency transfers, like any other financial business, can always be traced and suspicious transactions blocked.

That is, so-called self-hosted wallets (private users’ crypto asset wallet addresses) will be subject to oversight when they interact with custodial wallets managed by crypto asset service providers. The bill covers all transactions above €1,000. However, this bill does not apply to person-to-person transfers made without a service provider or a service provider acting on its behalf.The following article is for readers’ reference: Anonymous cryptocurrency wallets are now illegal in the EUSource: finboldThe use of unidentified self-hosted crypto wallets for cryptocurrency payments of any size is illegal in the EU, according to the latest EU regulation. The decision will be part of a series of new EU anti-money laundering laws (AML). According to Patrick Breyer on social media It is worth noting that Dr. Breyer is a European Parliament member of the German Pirate Party and one of the two leaders who opposed this approval. Another lawmaker who voted against was Gunnar Beck, representing the Alternative for Germany party.New EU anti-money laundering law: cash and crypto payments are partly illegalThe new anti-money laundering law specifically prohibits cash payments and any specific threshold for anonymous cryptocurrency payments. In this regard, any cash payment exceeding €10,000 will be considered illegal, as will anonymous cash payments exceeding €3,000. As stipulated in the law, the ban on cryptocurrency payments will specifically apply from unidentified self-custody wallets to service providers.

Furthermore, according to Dillon Eustace, the anti-money laundering package now approved will apply three years after it comes into effect. However, the Irish law firm expects the laws to be fully implemented before the usual enforcement timelines.Patrick Breyer’s stance on decriminalizing anonymous cash and cryptocurrency paymentsBreyer is skeptical of the effectiveness of passing these laws to fight crime. Furthermore, he emphasized that anonymous payments are a basic human right required to achieve personal financial freedom. Patrick Breyer said that generally speaking, prohibiting anonymous payments would have a minimal impact on crime, but would deprive innocent citizens of their financial freedom. We reserve the right to make online payments and donations without individual transactions being recorded. Pirate Party representatives pointed out from another perspective the negative impact of banning sovereign payments on the economy and society. In Patrick Breyer’s view, the EU’s cash war will have bad consequences! For thousands of years, societies around the world have been dominated by the use of privacy-preserving cash. As cash is gradually abolished, banks face the threat of negative interest rates and the risk of cutting off the money supply at any time. Dependence on banks is increasing at an alarming rate. This financial disenfranchisement must stop.What do EU citizens think about anti-money laundering laws banning cash and cryptocurrency payments?

Historically, European citizens have shown resistance to bans on any form of cash payments. Patrick Breyer described the “huge public outcry” when the European Commission consulted on restrictions on cash payments in 2017. In his words, more than 90% of the citizens surveyed expressed opposition to this move. Respondents believe that anonymous cash payments are a “basic personal freedom” and that “restrictions on cash payments cannot effectively achieve the underlying goals (combating criminal activities, terrorism, tax evasion)”.

In addition, informal economy expert Friedrich Schneider believes that these measures have “little effect on reducing crime rates.” In summary, the new anti-money laundering law will effectively ban cryptocurrency payments through self-hosted wallets. Essentially, most encrypted networks operate as permissionless networks, where anyone can generate an encrypted private key and thereby gain unlimited access to the system. This is one of the core value propositions of cryptocurrency, which is a more convenient, free and fair way to finance without any discrimination among its users. Experts and freedom advocates view this latest approval as a serious blow to financial freedoms and basic human rights. On social media European citizens and entrepreneurs are now asking whether the EU Parliament has the political power needed to approve such a ban.

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