Chaos in the blockchain world: After the European Parliament introduced tough measures against anonymous crypto payments, a dispute about the future of Bitcoin and other cryptocurrencies in Europe has broken out.
End of “Unhosted Wallets”?
The new rules, approved by the European Parliament, would ban all crypto transactions that do not involve participants’ personal information. The use of so-called “unhosted wallets” would thus become illegal. “Unhosted wallets” are crypto wallets that are operated by private users and not by companies like Coinbase and Kraken. The draft law is not yet final and must now be agreed upon in the trilogy talks with the European Council.
What is behind the design?
The European Union’s initiative is part of a package of measures designed to combat money laundering and other illegal financial transactions. “Illegal capital flows of crypto assets move largely undetected across Europe and the world,” said Ernest Urtasun of the EU’s Economic and Monetary Affairs Committee in a statement, according to GIN.
In fact, Bitcoin and other cryptocurrencies are popular means of payment on the dark web. However, it remains controversial whether criminal activities really play a greater role here than with traditional currencies. According to the European police agency Europol, cryptocurrencies only play a minor role in the criminal economy.
Criticism from the crypto industry
Members and entrepreneurs of the crypto scene have mostly criticized the EU’s plans. Brian Armstrong, CEO of crypto platform Coinbase, called the bill “anti-innovation, anti-privacy and anti-law enforcement”.
The industry association Crypto Council of Innovation expressed hope that the plans could be weakened again in the further course: “If the unique possibilities of crypto and the potential for new framework conditions were not recognized, it would be a great missed opportunity for the EU and its citizens,” the association wrote in a statement.
For years it has been expected that the relatively new blockchain technology will be more tightly regulated in Europe. The guidelines now envisaged could set a new direction for how cryptocurrencies are handled in the EU. Nevertheless, it is currently not possible to predict how exactly most of these changes would affect crypto startups or users.
However, many also see a signal effect in the EU’s plans: crypto technology is viewed more critically than optimistically in Europe. The situation is different in the United Kingdom, for example: Shortly after the EU plans were passed, Finance Minister Sunak announced that he wanted to make Great Britain a “global center for crypto technology”.