The European Parliament or EU is all set to vote to bring unhosted wallets, such as Ledger or Metamask, in the anti-money laundering [AML] package as part of the Transfer of Funds Regulation [TFR]. This was revealed in a Twitter thread posted by Patrick Hansen, Head of Strategy & Business Development at multi-chain DeFi wallet Unstoppable Finance.
Hansen in a series of threads pointed out the inconsistencies between the initial draft that was introduced and the one which would go under the vote. This according to him is an absolute red flag.
Different from the initial proposal that only required to collect [not verify] personal data from transfers made from/to an unhosted wallet, the draft now requires to verify the accuracy of information with respect to the originator or beneficiary behind the unhosted wallet.
But it doesn’t say how exactly a crypto service provider should be able to verify the unhosted counterpart, he added. The exec claims this would prevent most crypto firms unable and unwilling to transact with unhosted wallets anymore in order to stay compliant.
Secondly, Hansen mentioned that, for every crypto-transfer from an unhosted wallet over 1k EUR, crypto firms are required to inform the “competent AML authorities”. This would include all transactions, even if there is no sign/suspicion of money laundering. It is a gross violation of privacy rights, he exclaimed.
Citing an earlier document where EU members proposed additional restrictions, Hansen said that the European Commission might end up entirely banning transactions to private wallets.
The current Financial Action Task Force [FATF] travel rule requires businesses to verify all transactions that exceed 1,000 euros [$1,098]. However, the draft didn’t include any lower limit, meaning that all cryptocurrency transactions will be undergoing mandatory identity checks.
EU’s draconian crypto legislation enjoys widespread support
Hansen rued that the move to crack down on anonymous transactions enjoys broad support among lawmakers, terming it as concerning.
He then further went on to say that the Economic Affairs Committee is set to vote on de-anonymizing all cryptocurrency transactions to self-hosted wallets on March 29. If the proposal passes, it will then be debated by the “trilogue.”
As reported by TronWeekly, the EU’s last-minute amendment to restrict the use of proof-of-work was voted down after attracting strong pushback from the crypto community.