EU Anti-money Laundering Regulations May Ban Anonymous Cryptocurrency Use

02/22/2023 12:58 • Tech Ticker • 247 views

It is reported that according to the latest draft of the EU anti-money laundering regulations it has obtained, the current version of the draft may prohibit the use of encrypted assets and anonymous tools that enhance privacy, including private wallets or cryptocurrency mixers, but these restrictive provisions do not apply to self-managed wallets. In terms of transaction restriction rules, the latest version of the European Parliament’s review of the Anti-money Laundering Act led to the document changing the self-hosted wallet to the self-hosted address.

The new draft of EU anti-money laundering regulations will prohibit private wallets and currency mixers, and will not prohibit self-managed wallets

Interpret the above information:

The European Union (EU) is looking towards further regulating cryptocurrency use through the Anti-money Laundering (AML) regulations. The latest draft of the EU AML regulations may ban the use of encrypted assets and anonymous tools that ensure privacy, including private wallets or cryptocurrency mixers. However, these restrictive provisions do not apply to self-managed wallets, which are under the control of the user.

The EU has been working towards regulating cryptocurrencies since 2018. The current draft of the regulation seeks to further restrict anonymous use of cryptocurrency, which has been seen as a loophole that can be exploited by money launderers and terrorist organizations. The proposed regulations would involve a need for users to provide identification information and rely on exchange services to complete transactions to curb these illegal activities.

The draft regulations prohibit so-called “mixer” services that allow cryptocurrency users to mix their coins with those of others to increase anonymity. Private wallets that hold crypto-assets without connecting to outside networks and are under the control of the user are exempted under the current version of the draft.

The latest version of the European Parliament’s review of the AML Act led to the document changing the term self-hosted wallets to self-hosted addresses. This change in wording seeks to clarify the regulations for cryptocurrency users to avoid confusion between wallets and addresses. The new terminology puts the focus on the location of the cryptocurrency instead of the tools used to hold the cryptocurrency.

The proposed changes will have a significant impact on the cryptocurrency industry as it moves towards more regulations, oversight, and centralization. The regulations may face criticism from cryptocurrency advocates who see decentralized systems and anonymity as key features of the technology. However, the EU is taking steps to ensure that cryptocurrency activities are brought under regulatory oversight to prevent illegal activities such as money laundering and financing terrorism.

In summary, the EU’s AML regulations seek to regulate cryptocurrency activities and prohibit the use of anonymous tools that provide privacy for cryptocurrency transactions. While these regulations will not apply to self-managed wallets, it remains to be seen how these changes will impact the cryptocurrency industry.

Keyword: cryptocurrency, anonymity, EU regulations.

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