The European Parliament has passed provisions to a bill that aims to monitor anonymous crypto transactions.
On 31st March, the ECON and LIBE committees voted to pass amendments to its Transfer of Funds Regulation, which would require cryptocurrency service providers, especially exchanges, to verify the identities of the owners of self-hosted wallets with which transactions are being initiated.
These rules will majorly affect transactions that are above 1,000 euros worth of crypto using self-hosted wallets, such as Trezor, Ledger, MetaMask, among others.
110 committee members were involved. 58 voted in support of the controversial crypto rules, while 52 voted against the amendments.
Another vote will be conducted today on the Transfer of Funds Regulation. With the look of things, the final vote is not expected to see much resistance. Before the final vote is conducted, the bill could face trilogues with the European Commission and European Council in mid-April.
Explaining the new rules in a series of tweets on 30th March, Coinbase CEO Brian Armstrong, said:
“This means before you can send or receive crypto from a self-hosted wallet, Coinbase will be required to collect, store, and verify information on the other party, which is a not our customer, before the transfer is allowed.
“Moreover, any time you receive 1,000 euros or more in crypto from a self-hosted wallet, Coinbase will be required to report you to the authorities. This applies even if there is no indication of suspicious activity.
“Imagine if the EU required your bank to report you to the authorities every time you paid your rent merely because the transaction was over 1,000 euros.
“Or if you sent money to your cousin to help with groceries, the EU required your bank to collect and verify private information about your cousin before allowing you to send the funds. How could the bank even comply? The banks would push back. That’s what we are doing now.”
Paolo Ardoino, Tether, and Bitfinex CTO, also expressed his disappointment in the approval, stating that the new rules represent a setback for human rights.
Paolo Ardoino noted:
“Disappointed to see the proposal on self-hosted wallets passed today and hope the final vote on the report will take into consideration security risks and privacy violations that will transpire if enacted into law.
“Requiring crypto service providers to collect and verify personal data related to self-hosted wallets transfers raises major data and privacy concerns, and represents a big step back for human rights.
“Hope the ECON Committee will draft a text that would incentivise innovation, transparency as well as consumers’ protection in the EU.”