The European Parliament has passed a controversial piece of legislation that outlaws anonymous cryptocurrency transactions, a move that industry leaders say could have unintended consequences.
The new European law is meant to extend anti-money laundering requirements that apply to conventional payments over $1,000 Euros to the cryptocurrency sector. The new rules also scrap the floor for cryptocurrency payments, so payers and recipients of even the smallest transactions would need to be identified, including for transactions that have no host or come from self-hosted wallets.
However, cryptocurrency advocates say that the new legislation will stifle innovation and invade people’s personal privacy. They also say that some unregulated cryptocurrency exchanges could be cut off from the global financial system because of the new European legislation.
National governments said in December they wanted to scrap the $1,000 Euro threshold for cryptocurrencies on the basis that digital payments can easily circumvent the limit, and to include private wallets that aren’t operated by regulated cryptocurrency asset providers.
The legislation passed this week was met with fierce resistance from major cryptocurrency participants and legal experts who warned that heavy-handed privacy violations could face legal challenges in European courts.
Members of the center-right European People's Party (EPP) opposed many of the more controversial changes, condemning what they called a “de facto ban of self-hosted wallets.”
A separate proposal that’s now under review by the European Parliament would prevent transfers being made to “non-compliant” cryptocurrency service providers, which includes those operating in the European Union without authorization or that are not affiliated to or established in any jurisdiction.
Bitcoin's (BTC) price fell to $45,200 from $47,500 following the vote in the European Parliament.
