Crypto payment restrictions back on self-hosted wallets in final EU Parliament AML text

Policymakers in the European Parliament have agreed on the text of the anti-money laundering bill that’s due for a vote on March 28 and the crypto industry appears to have gotten a partial reprieve.

Following concerns raised by the digital assets industry, policymakers decided to revert back to the original language in the proposal about commercial payments, according to a draft obtained by The Block and confirmed by multiple sources.

An article that MEPs put into the bill aimed to place a cap on transactions merchants can accept unless the owner of a crypto wallet is fully identified. Changes previously introduced into the draft of the regulation proposed that only transfers made from an EU-licensed crypto service provider would be allowed to exceed an amount equivalent to €1,000 ($1,090), language that caused major pushback from the European digital assets industry.

The crypto sector’s concerns focused on this departure from the regulatory path already outlined in other bills and a perception it might create barriers for DeFi innovation.

Payment cap

In the latest version of the bill, cash transactions would be capped at €7,000 for commercial payments, in contrast the €1,000 value cap for crypto transactions involving pseudonymous wallets. The bill text allows for exceptions to the €7,000 cash threshold for interpersonal payments, except if they are for real estate, luxury goods, or a deposit into a financial institution. 

The return to the original language means that the transaction cap applies to self-hosted addresses — “unless the customer or beneficial owner of such self-hosted addresses can be identified,” the draft reads.

MEPs have added a mandate for the European Commission to assess whether to adjust the rule on commercial payments in three years’ time, to align with regulations like the European Union’s digital identity framework as well as the newly-proposed Anti-Money Laundering Authority’s requirements. 

The text is expected to receive a stamp of approval in a vote in the Parliament’s Committee on Civil Liberties, Justice and Home Affairs and Committee on Economic and Monetary Affairs, which oversaw the negotiations. Then, it will need to pass a plenary vote before entering inter-institutional negotiations. This will be an opportunity to re-open debate on requirements for commercial crypto payments.

Update: story updated to give more detail on the crypto industry’s concerns. 

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