In an effort to curb cryptocurrency criminal activity, anonymous cryptocurrency wallets are taking front stage once again. The unhosted wallets have long been suspected as a means to further criminal activity such as money laundering and terrorism finance.
By definition, an unhosted wallet means that the individual keeps their own private keys, i.e. “wallet” or “self-hosted wallet”, versus wallets not hosted by a third party such as a financial institution.
According to a press release, MEPs have adopted new rules mandating the European Banking Authority (EBA) to create a registry of crypto businesses that are at risk of money laundering, terrorism finance and other criminal activity.
The rules are part of the EU’s latest vote to clamp down on unhosted cryptocurrency wallets, which requires that crypto exchanges perform know-your-customer (KYC) routines on wallets sending and receiving funds from their platforms.
“MEPs want the [EBA] to create a public register of businesses and services involved in crypto-assets that may have a high risk of money-laundering, terrorist financing and other criminal activities, including a non-exhaustive list of non-compliant providers.
Before making the crypto assets available to beneficiaries, providers would have to verify that the source of the asset is not subject to restrictive measures and that there are no risks of money laundering or terrorism financing.”
Ernest Urtasun, co-rapporteur for the EU’s Committee on Economic Monetary Affairs (ECON), says that the change will close a common loophole criminals use to facilitate their illicit activities.
“Illicit flows in crypto assets move largely undetected across Europe and the world, which makes them an ideal instrument for ensuring anonymity.
As illustrated by all the recent money-laundering scandals, from the Panama Papers to the Pandora Papers, criminals thrive where rules allowing for confidentiality allow for secrecy and anonymity. With this proposal for a regulation, the EU will close this loophole.”
According to Coinbase CEO Brian Armstrong, the new changes obliterate the EU’s existing privacy standards, setting up the stage for mass surveillance.
“The latest draft by Parliament of the Transfer of Funds Regulation treats crypto, and every person who holds crypto, differently from fiat…
This eviscerates all of the EU’s work to be a global leader in privacy law and policy. It also disproportionately punishes crypto holders and erodes their individual rights in deeply concerning ways. It’s a bad policy.”
Featured Image: Shutterstock/Black Digital Cat/Natalia Siiatovskaia
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