Welcome to Blockchain Century, this is Philip on April 7th, 2024,and the topic of this episode is the latest EU crypto regulations.
Firstly, don't panic. Reports that the EU was banning anonymous crypto wallets and self-custodial payments are in fact incorrect.
The reports misrepresented comments from Patrick Breyer, a member of the European Parliament, regarding new anti-EU, anti-money laundering regulations (we'll call that AMLR).
I read the article and it says if you're hosting wallets for other people, they need KYC, which is the same as we now have in America.
Circle's EU strategy and policy director, Patrick Hanson, also moves to swiftly debunk the reports.
And I quote him,
“Self-custody wallets are not banned. Payments to and from self-custody wallets are not banned. P2P transfers are explicitly excluded from AMLR, as are self-custody software and hardware wallets… However, for example, to merchants with a non-KYC self-custody wallet will be more difficult or in the band, depending on the merchant setup.”
This change, as well as the lower thresholds for anonymous cash payments of 3K, has unfortunately been agreed months ago.
So what does AMLR actually mean for crypto in the EU? AMLR is not a crypto regulation. which stands for Crypto Assets Service Providers.
All CASPs, such as centralized crypto exchanges and custodial wallet providers, regulated under market and crypto assets legislation - MICA- will need to follow standard KYC AML procedures.
Yet in reality, they are already subject to these obligations under current AMLD legislations. Mika is a regulatory framework proposed by the European Union to govern digital with built-in anonymization.
As for transfer between CASPs and self-custody wallets, AMLR requires risk-mitigating measures, including blockchain analytics and collecting additional data about their original destination.
It brings the transactions in line with the Transfer of Funds Regulation, which is Financial Action Task Force, travel rule.
But this is nothing new either.
We'll probably talk a lot more about FATF in another episode. Regarding merchant payments, AMLR also limits cash payments to €10,000. There are no restrictions on using self-custodial wallets for buying goods or services in the EU.
However, the CASP will need to verify users' identity and implement additional KYC measures if the transaction is worth more than €1,000.
This will not be fully enforced yet, and it could have been a lot worse.
Previous versions of the proposed AMLR proposed a way stricter approach that would have meant KYC on self-custody.
They are at present targeting payments that require an intermediary under the cover of what they called high-risk payments. It would then be applied three years later.
As I said, we'll be covering more of this another time as these proposals fit into a broader debate about CBDCs and where crypto will fit in.
There's no doubt this is anti-crypto, an anti-crypto move, although it's all rolled into a bigger agenda, including a ban on any cash payments over €3,000 to require KYC and a total ban on all cash payments of over €10,000. On another note, the EU will ban all US dollar-backed stablecoins at the end of June.
I can only imagine they will try and launch a euro-backed stablecoin, as they're clearly terrified of all threats to their own currency. Remember that the USDT tether has a market cap of $100 billion, and as any traders here all know, the vast majority of trading is done versus the USDT tether.
I always end these things by saying that this is not financial advice, but if you have any investments on European-based exchanges, Most of them, whether it's Kraken or Binance, they do have euro pairs or even pound pairs on some of the exchanges, pound sterling.
This is a massive topic, and we'll come back to it as things develop.
Thank you for listening here at Blockchain Century, and please remember to subscribe at blockchaincentury.com.
Also, please remember that this is for educational and informative purposes only and does not constitute financial advice.
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