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EU Takes "Anti-Money Laundering" Stance Against Anonymous Crypto Transactions

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The European Parliament voted in favor of an anti-money laundering legislation which requires every crypto transfer be reported to authorities. The legislation cites the use of “unhosted wallets” as potential avenues for money laundering. 

The report states that the EU’s Transfer of Funds Regulation (TFR) is looking to regulate unhosted wallets like Metamask and other digital wallets that aren't licensed as a virtual asset service provider (VASP) in the European Union. The provision also looks to receive information from the sender as well as the receiver of the crypto transaction, even if the recipient is not a customer of a VASP. In fact, the proposal called for the full set of originator information to be sent with the crypto transaction, no matter the amount to meet the EU's need of “urgent" traceability. Wire transfer models were used as an example for the type of transparency the EU parliament is seeking. 

Non-compliant crypto-asset service providers are defined to be “(not) established in any jurisdiction” and don't have “central contact point(s) or substantive management presence in any jurisdiction… that is unaffiliated with a regulated entity or that operates in the Union” under the Markets in Crypto Assets (MiCA) regulatory framework. This framework would require each wallet to set up a license and force regulations in order to operate in countries in the EU. 

Regulations generally do not come without criticism and this is no different. Several members of the crypto industry such as Coinbase’s Chief Legal Officer Paul Grewal has said publicly that the changes being proposed are based on “bad facts” and that regulators view crypto being used for money laundering as misinformed. These policies seem to hurt companies like Binance, which has already received warnings from regulators in the U.K., Malta, and Italy, over its level of authorization. 

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Brandon is a data analyst who enjoys writing about bitcoin and finance. He is the co-founder of Green Candle Investments, a bitcoin and finance media company.

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