EU Legislators Pass a Contentious Crypto Bill Amid Criticism from Industry

Legislators in the European Union voted yesterday in support of contentious legislation to make anonymous crypto transactions illegal, a move that industry has criticized as stifling innovation and invading privacy. According to a source, more than 90 lawmakers voted in favor of the legislation.

The plans aim to expand anti-money laundering (AML) laws to the crypto sector, which now apply to traditional payments exceeding EUR 1,000 ($1,114). They also made new legislation for crypto payments, requiring the identification of payers and recipients of even the tiniest crypto transactions, including those involving unhosted or self-hosted wallets.

EU Legislators Pass a Contentious Crypto Bill Amid Criticism from Industry

National governments announced in December that they wanted to eliminate the EUR 1,000 threshold for cryptocurrency, and to expand the use of private wallets not maintained by regulated crypto asset providers.

Many of the more contentious amendments were rejected by members of the center-right European People’s Party (EPP), who denounced what they called a “de facto ban of self-hosted wallets.”

In an emailed statement on Thursday, EPP economic spokesperson Markus Ferber stated,

Such proposals are neither warranted nor proportionate. With this approach to regulating new technologies, the European Union will fall further behind other, more open-minded jurisdictions.

A separate legal proposal presented yesterday prohibited transfers to “non-compliant” crypto service providers, such as those operating in the EU without authorization or those not linked with or based in any state.
Yesterday’s vote came in spite of concerns from major industry players, such as Coinbase, and from other legal experts who urged that overly heavy-handed privacy violations could face legal challenges in EU courts.

The new legislation entails that Coinbase would have to disclose to the authorities any time a customer earned more than EUR 1,000 in crypto via a self-hosted wallet, according to the exchange’s CEO Brian Armstrong.

In order to pass it as a law, both the parliament and national ministers, who meet as the EU Council, must agree.  As the vote came through, Bitcoin’s price decreased around 2% in minutes, from $47,500 to $46,400.

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