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European Parliament Approves Rules to Block Unhosted Crypto Wallets

UTC by Kofi Ansah · 3 min read
European Parliament Approves Rules to Block Unhosted Crypto Wallets
Photo: Depositphotos

The legislation must first go through tripartite meetings between the EU Parliament, European Commission, and European Council to be officially adopted. This process is however not expected to derail the proposal.

The European Parliament on March 31 voted to approve provisions for new regulatory measures that would put a halt to anonymous crypto transactions. The vote was first confirmed to the press by Valeria Cusseddu, advisor to the Committee on Economic and Monetary Affairs.

Two committees under the European Parliament, LIBE and ECON, both voted to approve a proposal to amend its Transfer of Funds Regulation that would require crypto service providers, mostly exchanges, to collect and verify the personal identities of users who transact over 1,000 euros on unhosted crypto wallets. Unhosted wallets are non-custodial wallets, which do not rely on third parties.

According to voting tallies shared with reporters, the committee votes on the changes in question were 58 in favor, 52 against, and 7 abstentions. The committees were also expected to vote again on the Transfer of Funds Regulation although many reports suggested that the final vote wasn’t going to see any resistance. The bill could however undergo trilogies with the European Commission and European Council as early as mid-April, pending a final vote.

The legislation must first go through tripartite meetings between the EU Parliament, European Commission, and European Council to be officially adopted. This process is however not expected to derail the proposal.

The latest vote comes after a long debate amongst European policymakers and the crypto space over whether unhosted wallets should be subject to know-your-customer (KYC) regulations, which would force crypto firms to reveal personal information about wallet users.

The European Parliament’s decision has however been met with harsh criticisms from the crypto space as many figures believe this regulatory package tightens Know Your Customer (KYC) and Anti-Money Laundering (AML) rules for ”unhosted” private wallets.

Brian Armstrong, CEO of US-based crypto exchange Coinbase took to Twitter to express his displeasure with the latest development, drawing comparisons with fiat to illustrate the absurdity of reporting and verifying a 1,000 euro transaction. The CEO described the latest proposal from the European Parliament as  “anti-innovation, anti-privacy, and anti-law enforcement,” arguing that it holds cryptocurrency to a different standard than fiat.

“Imagine if the EU required your bank to report you to the authorities every time you paid your rent merely because the transaction was over 1,000 euros. Or if you sent money to your cousin to help with groceries, the EU required your bank to collect and verify private information about your cousin before allowing you to send the funds,” he stated.

“How could the bank even comply? The banks would push back. That’s what we are doing now,” he added.

Altcoin News, Cryptocurrency news, News
Kofi Ansah
Author Kofi Ansah

Crypto fanatic, writer and researcher. Thinks that Blockchain is second to a digital camera on the list of greatest inventions.

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