EU enacts ban on anonymous crypto transactions via self-custody wallets

In a recent regulatory change, the European Union (EU) has prohibited cryptocurrency transactions of any value made through unidentified self-custody crypto wallets. This update is part of the region's newly implemented Anti-Money Laundering (AML) regulations.

According to a post by Patrick Breyer, a member of the European Parliament for the Deutsch Piraten Partei, the majority of the EU Parliament’s lead commission endorsed the prohibition on March 19.

Notably, Dr. Breyer is one of the two leaders who opposed this approval. Gunnar Beck was the other Parliament member who voted against it, representing the Alternative for Germany (AfD) party. The ban on cryptocurrency payments applies specifically to unregistered wallets offered by service providers (hosted wallets), covering self-custody wallets provided via mobile, desktop, or browser applications.

The recent Anti-Money Laundering legislation specifically outlaws certain limits for cash transactions and anonymous cryptocurrency payments. Under these regulations, cash transactions exceeding €10,000 and anonymous cash payments over €3,000 will be deemed illegal.

The approved laws are expected to be fully operational within three years from their entry into force. However, Dillon Eustace, an Ireland law firm expects these laws to become fully operational before the usual enforcement timeline.

Fundamentally, many cryptocurrency networks function within permissionless environments, allowing anyone to create a cryptographic private key and granting unrestricted entry into the system.