European Parliament scraps 1,000 euro limit on cryptocurrency payments from self-hosted wallets


25th March 2024 – (Brussels) The lead committees of the European Parliament have decided to remove a 1,000 euro (US$1,080) cap on cryptocurrency payments made from self-hosted crypto wallets as part of new anti-money laundering laws. The decision comes as the European Union’s Economic and Monetary Affairs Committee and the Civil Liberties, Justice and Home Affairs Committee passed the Anti-Money Laundering Regulation (AMLR) on 19th March, following the provisional agreement reached by the European Council and Parliament in January.

Initially, there was a proposal to restrict businesses to transactions of up to 1,000 euros when using a self-hosted crypto wallet. However, this proposal was eliminated, along with a provision that sought to implement identity checks on self-hosted wallets receiving funds. Nevertheless, crypto exchanges, referred to as Crypto-Asset Service Providers (CASPs) in the EU, will still be required to conduct “customer due diligence,” including identity verification checks, on users conducting business transactions of at least 1,000 euros.

The AMLR works in conjunction with other cryptocurrency-focused laws, such as the Markets in Crypto-Assets (MiCA) framework, to reinforce existing prohibitions on CASPs offering accounts to anonymous users or supporting privacy coins like Monero (XMR), which conceal transaction details.

CASPs will also be obligated to implement “mitigating measures” for transfers between their platforms and self-custody wallets, where users hold their private keys. These measures include verifying the identity of the exchange wallet holder when funds are sent from a self-custody wallet.

Additionally, the law imposes limits on cash payments, capping them at $10,800 (10,000 euros), with EU member states having the option to set lower limits. Furthermore, anonymous cash payments exceeding $3,240 (3,000 euros) are prohibited.

The AMLR is expected to be fully operational within the next three years, likely by 2027, pending approval from the EU Council and the European Parliament plenary, which is scheduled to convene on April 10.

The newly enacted regulations have drawn mixed reactions from the crypto community. While some view them as necessary for the industry’s legitimacy, others express concerns about potential privacy infringements and limitations on economic activity. Patrick Breyer, a member of the European Parliament representing the Pirate Party Germany, criticised the laws, labelling them a “war on cash” and arguing that they compromise economic independence and financial privacy.

Daniel “Loddi” Tröster, host of the Sound Money Bitcoin Podcast, highlighted the practical challenges and consequences of the legislation. He pointed out the impact on donations and raised concerns about the broader implications for cryptocurrency usage within the EU, cautioning against the potentially stifling effects of the new rules.