Less than a week after the ban on coins using the Proof-of-Work consensus algorithm was removed from the draft “Markets in the Cryptocurrency Asset Industry” (MiCA) bill, a threat New to the cryptocurrency industry has re-emerged in the European Union (EU). This time, decentralized wallets are on the radar of regulators.
On Thursday 31 March, the European Parliamentary Committee on Economic and Monetary Affairs will vote on Anti-Money Laundering (AML) regulations seeking to amend the existing Money Transfer Regulations under The direction further expands the requirement for financial institutions to attach information about the parties dealing with crypto-assets.
Patrick Hansen, a crypto advocate from blockchain firm Unstoppable DeFi, has warned that the latest draft of the regulation would require crypto service providers to not only collect personal data. involves transfers to and from decentralized wallets, but also to “verify the accuracy of information regarding the originator or beneficiary behind the decentralized wallet”.
Hansen is also concerned that it is fairly obvious that in many cases it will be difficult or impossible for crypto service providers to verify the credentials of a decentralized party. Therefore, in order to maintain compliance and protect their position in the EU market, companies will likely be forced to cut off transactions with decentralized wallets.
Even if legislators do provide specific guidance on verification procedures, the potential operational costs of this compliance could unnerve retail investors and make the market unsustainable. even more decentralized.
The draft also includes an obligation to notify AML authorities of any remittance of more than 1,000 EUR to/from a decentralized wallet. Furthermore, within a year of the bill’s enactment, the European Commission would be required to assess whether there are any “additional measures to reduce risk” from such transactions. This could very well lead to a complete ban on the decentralized wallets that users are regularly using.