Recently, there have been claims circulating within the cryptocurrency industry that the European Union has banned anonymous crypto wallets and transactions. However, industry expert Patrick Hansen has stepped forward to debunk these claims. He clarified that the recent anti-money laundering (AML) law passed by the EU does not specifically target cryptocurrencies. In fact, he emphasized that the law is a broad framework that applies to all financial institutions, including crypto-asset service providers (CASPs) and other services susceptible to AML risks.
It is crucial to understand that the AML law passed by the EU is not specifically aimed at regulating cryptocurrencies. Hansen pointed out that the law will apply to all CASPs, such as exchanges and brokers, that are regulated under the Markets in Crypto Assets (MiCA). These CASPs will be required to follow standard know-your-customer (KYC) and AML procedures like customer due diligence (CDD). This is a standard practice in the financial industry and not a new restriction imposed solely on crypto exchanges and custodial wallet providers in the EU.
Contrary to the rumors suggesting an outright ban on anonymous crypto wallets, the AML law actually includes provisions for them. Hansen explained that custodial wallets are already restricted from providing services to anonymous users under existing regulations. Additionally, CASPs will be prohibited from offering accounts for privacy coins. This aligns with global business practices and is not unique to the EU region. The Markets in Crypto Assets (MiCA) regulation also prohibits the listing of cryptocurrencies with built-in anonymization functions. Therefore, these restrictions are not novel and have been part of existing regulations.
Hansen highlighted that the AML law reaffirms existing rules for CASPs and has an “extremely limited” impact on the crypto sector in the EU. The law does not introduce significant new restrictions on self-custody payments, wallets, or peer-to-peer transfers. As a result, individuals in the EU will still be able to use their self-custody wallets for purchasing goods and services without facing additional restrictions. It is essential to recognize that the law is not designed to hinder legitimate cryptocurrency activities but rather to enhance AML measures in the financial sector.
The final text of the AML law was approved by the Economic and Monetary Affairs Committee (ECON) in the EU in March. It now awaits final approval in the EU Parliament’s plenary and the EU Council. Once the law is fully ratified, it will provide a regulatory framework that ensures compliance with AML standards across the EU financial sector, including cryptocurrencies. It is crucial for stakeholders in the crypto industry to stay informed about such regulatory developments and understand their implications for their operations.
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