The EU has proposed changes to the law that would compel companies transferring Bitcoin and other crypto assets to collect information on the recipients and senders. It marks a significant threat to the anonymity of crypto transactions, which has been lauded by crypto proponents ever since the market first emerged.
The proposal was outlined in the EU’s “Beating Financial Crime” press release on Tuesday. It would make cryptocurrencies and other assets more traceable and therefore help stop crimes like money laundering and the financing of terrorism, according to the EU.
Under the new rules, anonymous crypto-asset wallets would be prohibited. It could take up to two years for the proposals to actually become law. In the press release, the Commission argued that crypto-asset transactions should be subject to the same rules as wire transfers.
These proposals are part of the Commission’s efforts to protect EU citizens and the financial system from money laundering and terrorist financing. They aim to facilitate the detection of suspicious transactions and activities and to close the loopholes that criminals use to launder the proceeds of crime through the financial system or to finance terrorist activities.
“Given that virtual assets transfers are subject to similar money-laundering and terrorist-financing risks as wire funds transfers… it therefore appears logical to use the same legislative instrument to address these common issues.”
The Commission also proposed an EU-wide limit of $10,000 on large cash payments as part of its strategy against money laundering.
Certain crypto firms are already covered by the EU’s anti-money-laundering rules, although the Commission stated that the new proposals would “extend these rules to the entire crypto-sector, obliging all service providers to conduct due diligence on their customers.”
The rules would force any company transferring cryptoassets for a customer to record their name, address, date of birth and account number, as well as the name of the recipient. The EU will need the agreement of member states and the European Parliament in order to turn the proposals into law.
The EU’s move comes as authorities around the world continue to crackdown on the cryptocurrency market. China ordered banks and payment providers to stop supporting crypto transactions back in June, a move that wiped $400bn off the market. Bitcoin again slipped as much as 5% to $29,300 in the wake of the EU’s proposals, its lowest price since 22nd June.