EU Looks To Ban Anonymous Crypto Transactions
Amidst fears of money laundering and related crimes, the European Union has proposed the restriction of anonymous crypto transfers to counter the rise of fraudulent transactions – a move that would make Bitcoin and other crypto fully traceable.
The EU aims to increase its already considerable efforts to repress criminal activity and protect its financial sector. A publication released by the EU contains details of the proposal, expressing just how the commission intends to go about the crackdown.
Plans to Tighten Regulation
The EU in its statement expressed concerns about the proclivity of cryptocurrencies to be used for fraud due to its privacy and ease of use in borderless transactions.
Aside from the EU’s proposed ban on anonymous transactions, outlined in the publication were also plans to ensure that firms handling digital assets collect data from customers who wish to make transfers.
While the rule is expected to apply to all service providers within the crypto industry, plans for obtaining customer data are more likely to be intended for large transactions. This will effectively make all crypto transactions, including those in BTC, fully traceable.
The information required by the EU includes the name of the client, address, date of birth, and account number of the person making the transfer as well as the recipient's name. The recipient's service provider is also expected to ensure none of the required information is absent.
Law enforcement authorities will be granted access to information obtained via the new system in a bid to swiftly probe into suspicious activities relating to digital transactions across the border.
As part of the rise in regulation, the EU will set up an institution to function as a central authority in stabilizing financial security across Europe.
The body will work to counter money laundering and financial terrorism. It will also be responsible for supervising the imposition of a limit of €10,000 ($11,800) on bulky transactions.
Not all wallets are however expected to be affected by the possible rule. The new measure might just only extend to custodial wallet providers such as exchanges and web wallets. Non-custodial and official wallets utilized by most crypto projects will not be affected.
What Does This Mean for the Crypto Industry?
Part of the biggest appeal of cryptocurrencies is their privacy. It is not their only allure of course: cryptocurrencies are decentralized and are not subjected to centralized powers. A move to remove these two perks overrides the essence of digital currencies in the first place.
Only recently, the rise of centralized digital currencies like the Digital Yuan (and opposition to coins like Bitcoin) were beginning to raise some worry. From CBDCs to the involvement of influential central bodies like the European Union, the scramble to put a check to the growing traction of the crypto industry is becoming even more apparent.
It is a new era. An unfamiliar one at that. The EU’s unusual plans for the crypto space are expected to take effect by 2024. It would be interesting to see how much traction the crypto market would have gained in three years. A fair number of crypto enthusiasts might be unconcerned about revealing a few personal details; except it does not end there, does it? Centralization almost never does.
The European Union awaits the approval of the proposal by the European Parliament and European Council, as the EU hopes to have the regulating body functional by 2024.
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