European Union vote against anonymous trading on exchanges

European Union lawmakers have voted in favor of a law that will ban privacy-based crypto transactions in exchanges. However, the crypto community is strongly against the move, with many saying it would stifle the industry’s growth potential. Many are also concerned that the law will prevent innovation in the industry and trample on users’ privacy.

The AM law in traditional finance to be applied to crypto

Based on the proposal document, over 90 lawmakers voted in favor of the controversial law. The proposal will be extending anti-money laundering (AML) requirements in the traditional payments over €1,000 to the crypto industry. This means that crypto transactions on exchanges will not carry the usual anonymous status.

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Additionally, the new law also scrapped the floor for crypto payments. As a result, payers and receivers of the smallest amount would need to be identified. These include transactions with self-hosted or unhosted wallets.

In December last year, EUR governments agreed that they will scrap the €1,000 on transactions when it comes to disclosure of information about users. The reason is that digital payments can easily get around the limit with multiple transactions below the threshold. The idea to cancel the threshold was also to include private wallets that are not operated by regulated crypto asset providers.

Stakeholders against the proposed changes

Stakeholders in the crypto industry such as Coinbase have condemned the new law, pointing out the legal challenges that may come from heavy privacy violations.

Members of the center-right European People’s Party(EPP) are also against any of the proposed changes. According to the group, the action is a “de facto ban of self-hosted wallets.”

Markus Ferber, the EPP economic spokesperson, faulted the proposal, saying it is neither “warranted nor proportionate.” He added that the European Union is likely going to lag far behind compared to other more open-minded jurisdictions when they adopt the new law.

In another document discussing the legality of crypto exchanges, the EU associations voted to stop the transfers made to non-compliant crypto service providers. The new proposal will also affect those operating within the EU without authorization or not properly licensed in any jurisdiction.