EU sets sights on cryptocurrency in a major anti-money laundering overhaul

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German Member of the European Parliament Patrick Breyer.

24th March 2024 – (Brussels) The European Parliament’s principal committees have voiced their approval for stringent regulations that would effectively put an end to anonymous cryptocurrency transactions through hosted wallets. The move is part of a broader initiative to incorporate the burgeoning cryptocurrency sector within the scope of the European Union’s Anti-Money Laundering and Counter-Terrorist Financing directives.

This legislative stride follows a provisional consensus reached between the European Council and Parliament, aiming to extend the regulatory net over a market that has, until now, been marked by its libertarian ethos and relative autonomy.

On the 19th of March, German Member of the European Parliament Patrick Breyer, representing the Piratenpartei Deutschland (Pirate Party), disclosed via a blog post that the “majority of the EU Parliament’s lead committees” had given the green light to the revised AML statutes. Breyer, alongside Gunnar Beck from the Alternative für Deutschland (Alternative for Germany), stood as one of the solitary dissenting voices against the clampdown on anonymous crypto dealings. The restrictions specifically target wallets under the custodianship of third parties, notably those managed by centralised digital currency exchanges.

The incoming AML framework sets a threshold on financial dealings, capping anonymous cash transactions at 3,000 euros for commercial purposes and outright banning cash dealings above 10,000 euros in the realm of business transactions.

With the legislative gears turning, the new measures are slated to be fully functional within a three-year timeframe post-enactment. However, commentary from Dillon Eustace, a legal firm based in Ireland, suggests that the roll-out might be expedited.

Cryptocurrency networks are traditionally open systems that allow individuals to engage in transactions with a considerable degree of anonymity – a cornerstone principle of the digital currency world.

In the aftermath of the committees’ endorsement, Breyer released a statement articulating his opposition. He argued that the bill infringes upon financial privacy and economic independence, going so far as to label the right to anonymous transactions as a foundational civil liberty.

The crypto sector’s reaction to the EU’s regulatory initiatives has been mixed. Proponents of the new laws argue they are essential for preventing illicit activities. Conversely, critics worry that such measures might encroach upon individual privacy and hinder financial innovation.

Among the vocal opponents is Daniel “Loddi” Tröster, presenter of the Sound Money Bitcoin Podcast, who has highlighted the practical difficulties the legislation poses. Tröster has drawn attention to the potential repercussions for philanthropic contributions and the broader ramifications for cryptocurrency utilisation within the EU, pointing to the possibly restrictive effects on the digital economy.