The European Parliament’s key committees have given the green light to a ban on anonymous transactions involving cryptocurrencies via hosted crypto wallets. This is part of the European Union’s broader efforts to strengthen Anti-Money Laundering (AML) and Counter-Terrorist Financing laws.
The updated AML legislation, which received approval on March 19, imposes restrictions on cash transactions and anonymous cryptocurrency payments. The new regulations prohibit anonymous cash payments exceeding €3,000 in commercial transactions, and completely ban cash payments over €10,000 in business transactions.
The ban on anonymous crypto transactions specifically targets hosted or custodial crypto wallets provided by third-party service providers, such as centralized exchanges.
However, the legislation has its critics. MEP Patrick Breyer of the Pirate Party of Germany, one of only two members who voted against the ban, argues that it undermines economic independence and financial privacy. He asserts that anonymous transactions are a fundamental right and that the ban would have minimal impact on crime, but would effectively rob innocent citizens of their financial freedom.
Breyer voiced his concerns about the EU’s “war on cash,” including the potential for negative interest rates and the risk of banks cutting off the money supply. He stressed the importance of preserving the best attributes of cash in the digital age and protecting the right to make and receive online payments without personal transactions being recorded.
The crypto community’s response to the EU’s regulatory measures has been mixed. While some believe the new AML laws are necessary, others worry they may infringe on privacy and restrict economic activity.
Daniel “Loddi” Tröster, host of the Sound Money Bitcoin Podcast, highlighted the practical challenges and consequences of the recent legislation, particularly its impact on donations and the wider implications for cryptocurrency use within the EU.
Critics of the ban argue that, unlike cash, which is entirely anonymous, cryptocurrency transactions can be traced on the blockchain. Law enforcement has successfully prosecuted criminals by detecting unusual patterns and identifying suspects. They also point out that Virtual Assets play a minor role in the global financial system, and there is insufficient evidence to suggest they are frequently used for money laundering. The legislation is expected to be fully implemented within three years from its entry into force.
