In EU’s Crypto Crackdown, Parliament Votes against Privacy in Transactions Despite Industry Criticism

Two committees of the European Parliament voted on 31 March to pass bills that would remove all secrecy from cryptocurrency transactions. But the industry believes that this move would hinder innovation and encroach on human integrity.

With 93 votes in favor and 14 abstentions, the Committee on Economic and Monetary Affairs (ECON) and the Committee on Civil Liberties (LIBE) voted in favor of adopting legislative proposals aimed at reducing crime.

The proposals aim to extend the requirements for money laundering (AML) that apply to traditional payments of more than EUR 1,000 (USD 1,114) to the crypto sector.

They also raise the bar for cryptocurrencies, which requires that payers and recipients of even the smallest cryptocurrencies be identified, including those involving wallets without a host or intrinsic value. Additional measures under consideration could shut down unregulated crypto exchanges from the traditional financial system.

In December, authorities said they wanted to remove the € 1,000 cryptocurrency threshold, citing how easily digital payments could bypass the border and include private wallets not run by regulated cryptocurrency providers.

But many of the more controversial changes were opposed by members of the center-right European People’s Party (EPP), who condemned what they called a “de facto ban on self-respecting wallets”.

A separate bill presented on March 31 would ban transfers to “incompatible” crypto service providers, such as those operating in the EU without a license or those not connected to or based in any state.

“In line with the new requirements agreed by MEPs, all transfers of cryptocurrencies will need to include information on the source of the asset and its beneficiaries, information to be made available to the competent authorities,” a statement released by the European Parliament said. on its website.

Despite opposition from significant sector players such as Coinbase and legal experts who warned that excessive violations of privacy could face legal challenges in EU courts, the vote went through.

Under the new legislation, Coinbase would have to disclose to the authorities every time a customer acquired more than 1,000 euros in crypto via a wallet with its own host, according to the exchange’s CEO Brian Armstrong.

He wrote in a tweet: “In addition, every time you receive € 1,000 or more in crypto from a hosted wallet, Coinbase will need to report you to the authorities. This is true even if there is no evidence of suspicious activity.”

On the other hand, one of the proponents of the bill stated that traceability is crucial.

As reported, Ernest Urtasun, co-rapporteur for ECON, said in a statement, “As illustrated by all the recent money laundering scandals, from the Panama Papers to the Pandora Papers, criminals thrive where rules that allow secrecy allow secrecy and anonymity.”

MEPs will negotiate the final legislative language with the member governments. The measure is expected to be voted on by the European Parliament in April this year.

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