European Parliament wants user identification even in private cryptocurrency wallets
On Thursday (31), the European Parliament voted to impose new regulatory measures that essentially ban anonymous cryptocurrency transactions.
The vote had been first reported by CoinDesk and, shortly after, was confirmed to Decrypt by Valeria Cusseddu, a consultant to the Committee on Economic and Monetary Affairs (or ECON, for its acronym in English).
The ECON and Civil Liberties, Justice and National Affairs (or LIBE) committees voted to pass a proposal that would require cryptocurrency service providers such as exchanges to collect personally identifiable information from people who trade more than €1,000 using so-called wallets. non-custodial of cryptocurrencies.
Despite close voting on several amendments, the final draft was approved by a majority.
For legislation to be officially adopted, it needs to go through tripartite meetings between the European Parliament, the European Commission and the European Council. However, it is expected that this process will not make the legislation unfeasible.
Non-custodial or self-custodial portfolios are not dependent on third parties. Examples include MetaMask, WalletConnect, or hardware wallets such as Ledger and Trezor.
The vote comes after discussions between lawmakers and the crypto industry over whether such wallets could be subject to “know your customer” (or KYC) requirements, requiring companies to provide personal information about wallet users.
Generally, the industry is against this measure, as users of non-custodial wallets are not necessarily “customers”.
Brian Armstrong, CEO of the crypto exchange Coinbase, tweeted that the proposal is “anti-innovation, anti-privacy and anti-law enforcement”, arguing that he considers cryptocurrencies to be a different standard than fiat currencies.
“This means before you can send or receive crypto from a self-hosted wallet, Coinbase will be required to collect, store, and verify information on the other party, which is a not our customer, before the transfer is allowed.”
“Moreover, any time you receive 1,000 euros or more in crypto from a self-hosted wallet, Coinbase will be required to report you to the authorities. This applies even if there is no indication of suspicious activity.”
5/ Moreover, any time you receive 1,000 euros or more in crypto from a self-hosted wallet, Coinbase will be required to report you to the authorities. This applies even if there is no indication of suspicious activity.
— Brian Armstrong – barmstrong.eth (@brian_armstrong) March 30, 2022
“Imagine if the European Union required your bank to report you every time you paid your rent just because the transaction was over 1,000 euros,” he joked.
Not all parliamentarians were in favor of implementation. Markus Ferber, a member of the European People’s Party (or EPP), insinuated that it was the equivalent of a ban on private wallets (it is not).
Paul Tang, a member of the European Parliament who heads the Fiscal Affairs Committee, responded that such concerns were overblown.
“In today’s vote, we will not ban anything,” he tweeted. “Instead, we will enforce verification to prevent crime and corruption through non-custodial wallets.”