The European Parliament decided to criminalize anonymous cryptocurrency transactions by ensuring that all transactions provide information about the people involved.
The new know-your-customer regulations are intended to stop money laundering in Europe and would also apply to transactions employing unhosted wallets.
The EU vote highlights the desire to hold cryptocurrency businesses more accountable for the digital assets that pass through their platforms as well as the rising worry about the use of bitcoins for criminal purposes such as money laundering.
There are currently no regulations in the EU that permit the tracking of crypto-asset transactions and revealing information about the initiator or recipient of such transfers.
According to Ernest Urtasun, co-rapporteur for the EU’s Committee on Economic and Monetary Affairs, “illicit transfers in crypto assets travel virtually unnoticed across Europe and the world, making them an excellent vehicle for maintaining anonymity.”
After the voting, the regulations still need to be agreed upon by EU countries through the EU Council before they become operative. Leaders in the cryptocurrency business swiftly criticized the EU vote as damaging to innovation and ineffective. The president and co-founder of Gemini, Cameron Winklevoss, stated in a statement sent by email to Protocol that this law hurts the development of cryptocurrencies without providing a corresponding advantage against money laundering.
Brian Armstrong, CEO of Coinbase, criticized the idea in a tweet just before the vote, calling it “anti-innovation, anti-privacy, and anti-law enforcement.” The new regulations are a part of a new anti-money laundering package that sets steps to enhance EU laws against money laundering and terrorist funding. It solves the flaws of the current system, which include poor supervision, insufficient suspicious transaction detection, and ineffective implementation.
Recently, major crypto businesses launched steps aimed at enhancing KYC and anti-money-laundering procedures inside the sector. Coinbase and Circle introduced a digital system that would allow businesses to confirm consumers’ identities while preserving their sovereignty over their personal information. The Treasury Department’s Travel Rule, which mandates that information regarding who is transferring how much and to whom must “travel” with that transaction, was another announcement made by the cryptocurrency business.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.