The recent EU Anti-Money Laundering Regulation (AMLR) has sparked intense debate over the balance between combating financial crime and protecting citizens' rights to privacy and economic freedom. The new law has been approved by most of the EU Parliament's main committees and has attracted criticism and support from a variety of stakeholders.
Following the March 22 Finbold article, original title “Anonymous cryptocurrency wallets are now illegal in the EU.” activity It happened on social media over the weekend. This article used a blog post by Member of the European Parliament (MEP) Patrick Breyer as its central source, providing a scathing perspective on the restrictive new law. The title of the article was subsequently updated to “EU bans anonymous crypto payments to hosted wallets” following debate over whether the article's focus was overly alarming.
Why anonymous cryptocurrency wallets were considered banned
Mr. Breyer's original post emphasized that under the new regulations, anonymous cash payments in commercial transactions of more than 3,000 euros will be prohibited, and cash payments in commercial transactions of more than 10,000 euros will be completely prohibited. Additionally, anonymous cryptocurrency payments to hosted wallets will be prohibited without minimum standards.
Breyer, who calls himself a digital freedom fighter for the Pirate Party, expressed strong opposition to the new law in his post. He argues that banning anonymous payments would deprive innocent citizens of their economic freedom and privacy while minimizing the impact on crime. Breyer points out that opposition groups like the late Alexei Navalny and his wife and organizations like WikiLeaks rely on anonymous donations, often in virtual currency, to fund their operations. .
Mr Breyer also expressed concern about the potential impact of the EU's “war on cash”. He warns that the creeping demonetization of cash could lead to negative interest rates and increased dependence on banks, which could ultimately lead to economic disenfranchisement. Instead, he is looking for ways to bring the best properties of cash into the digital future, allowing citizens to make payments and donations online without their personal transactions being recorded.
Payments to anonymous wallets are prohibited by exchanges
But Patrick Hansen, Circle's EU strategy director, said: tried to clarify What he believes to be misinformation surrounding AMLR. Mr Hansen is a former European Parliament staffer who regularly reported on EU law before joining Circle, demonstrating a comprehensive understanding of policy. Mr. Hansen emphasized that self-custodial wallets and payments to/from these wallets are not prohibited under the new regulation. P2P transfers are also explicitly excluded from AMLR.
However, Hansen notes that using self-custodial wallets without KYC (Know Your Customer) to pay out cryptocurrencies to merchants may be more difficult or prohibited depending on the merchant's settings. I admit that. He points out that AMLR only applies to “obligated entities” and service providers, and not to providers of hardware, software, or self-custody wallets that do not have access to or control over crypto assets.
Under AMLR, crypto asset service providers (CASPs) such as exchanges will be required to follow standard KYC/AML procedures and will be prohibited from offering anonymous accounts or accounts for privacy coins. Hansen argues that this is consistent with existing practice and is not new to the industry.
For transfers between CASPs and self-custodial wallets, AMLR mandates “risk mitigation” measures such as blockchain analysis and the collection of additional data about the source/destination of the crypto assets. This is in line with the Transfer of Funds Regulations (TFR), which is the implementation of the Financial Action Task Force (FATF) travel rules in the EU.
Regulatory debate regarding self-custodial cryptocurrency wallets continues in the European Union
Ultimately, the debate over the EU's new anti-money laundering regulations highlights the ongoing tension between combating financial crime and protecting citizens' rights to privacy and economic freedom.
Critics such as Patrick Breyer see the regulation as a serious threat to these rights, while others like Patrick Hansen argue that the regulation is largely consistent with existing practice and that The department believes its concerns may be overblown. As this regulation comes into force, it will be important to monitor its impact on the fight against money laundering and the rights of his EU citizens.
It is clear that the new regulations are very strict, and there is discussion about how requiring KYC on wallets will deter illegal activities. If a criminal illegally sends cryptocurrencies to an anonymous wallet, he may only be violating two laws instead of one, and if a private citizen sends Lightning money for coffee in her wallet. You may also be asked for her KYC to pay.
Still, an important fact remains. Holding cryptocurrencies in anonymous non-KYC wallets is not illegal in the EU. There are only strict limits on what can be done unencrypted. Restrictions on remittances could become even stricter given the latest plans for a digital euro CBDC.
