- European Parliament committees approve a ban on all custodial wallet crypto transactions to combat money laundering and terrorism financing.
- Breyer and Beck oppose the ban, citing threats to financial privacy and economic independence; legislation includes cash transaction limits.
- Legislation expected to fully implement within three years, aims at permissionless crypto networks, sparking mixed reactions in the crypto community.
The leading committees of the European Parliament have endorsed a prohibition on all cryptocurrency transactions conducted via custodial wallets. This development follows a preliminary agreement between the European Council and the Parliament to broaden sections of the EU’s Anti-Money Laundering (AML) and Counter-Terrorist Financing regulations to encompass the cryptocurrency sector.
A post by Patrick Breyer, who represents the Piratenpartei Deutschland (Pirate Party of Germany) in the European Parliament, indicated that the EU Parliament’s primary committees ratified the updated AML legislation on March 19.
Breyer was one of the two legislators who opposed the prohibition on unidentified cryptocurrency transactions, alongside Gunnar Beck from the Alternative für Deutschland (Alternative for Germany). The restriction specifically targets custodial or hosted crypto wallets provided by third-party services, including centralized trading platforms.
The newly enacted Anti-Money Laundering (AML) laws introduce restrictions for both cash dealings and anonymous crypto payments. According to these regulations, anonymous cash transactions exceeding 3,000 euros in commercial settings will be prohibited, and any cash transactions over 10,000 euros will be entirely forbidden in business contexts.
The newly passed legislation is anticipated to be completely implemented within three years following its activation. Nonetheless, Dillon Eustace, a law firm located in Ireland, predicts that the law will become fully effective sooner than expected.
Cryptocurrency networks typically operate in permissionless settings, where individuals can generate a cryptographic private key, thereby providing them anonymous and unrestricted access to the system — a core tenet of the cryptocurrency philosophy.
Following the approval of the legislation by the leading committees, Breyer issued a press statement explaining his reasons for opposing the bill, highlighting that it threatens financial privacy and economic independence. He argued that the right to conduct transactions anonymously is a fundamental freedom.
The reaction within the cryptocurrency community to the EU’s regulatory actions has been varied. While some view the new Anti-Money Laundering (AML) regulations as necessary, others worry about potential invasions of privacy and limitations on economic freedom.
Daniel “Loddi” Tröster, the host of the Sound Money Bitcoin Podcast, pointed out the practical difficulties and negative outcomes associated with the latest legislation. He discussed its effects on donations and the wider implications for the use of cryptocurrencies within the EU, expressing concerns about the restrictive nature of these regulations.
