In an unprecedented move regarding regulation of digital assets, the European Union has taken steps to force companies who have “unheated” wallets to incorporate KYC protocols on large transactions.
According to a draft report from the EU, companies who operate these wallets like MetaMask, WalletConnect, Ledger, and Trezor will be required to have accurate information on senders and recipients of crypto transactions that exceed €1000.
The Committee on Economic and Monetary Affairs and the Committee on Civil Liberties, Justice and Home Affairs passed the laws in an attempt to inhibit money laundering via the blockchain within the EU.
In early December, Slovenian Minister for Finance Andrej Šircelj highlighted the steps the EU had made in preventing malicious leveraging of blockchain technology. This new law is a result of that continued effort.
“Today’s agreement is an important step towards closing the gaps in our financial systems that are malevolently used by criminals to launder unlawful gains or finance terrorist activities. Crypto-assets are more and more at risk of being exploited for money laundering and criminal purposes, and I’m glad the Council could make swift progress on this urgent proposal.”
This new implementation is a lighter version of previous attempts at oversight against cryptocurrencies by the EU, as mid-March saw the rejection of a proposal by the EU to outlaw both Ethereum and Bitcoin mining in EU member nations.
The EU argues that above the money laundering potential of blockchain technology and digital assets, the carbon footprint of proof-of-work model assets like Bitcoin and Ethereum are extremely detrimental to the environment. The union has brought this argument to the table before in what some have called previous attempts to ban the proof-of-work model all together.
Ernest Urtasun, shadow a member of the European Parliament within the Greens/EFA political group told Al Jazeera after previous attempts at regulation of cryptocurrencies by the EU that the union does not intend to ban proof of work tokens altogether.
“It was not as simple as this,” said Urtasun. “Our proposal was more complex and more taking into account the need of the industry to adapt.”
Much like in the US, lack of oversight in cryptocurrencies by the EU’s lawmakers have been a major cause of hesitancy when it comes to legacy financial institutions incorporating digital assets into their products and services.
The EU’s process of enforcing specialized regulation on the existing crypto industries is without a doubt being closely watched by both the private and public playmakers in the economic and digital asset landscapes here in the states— where nothing above acknowledgement of existence of digital assets has taken place.
As government bodies attempt to tame the wild west of crypto markets around the world, the blurry line of regulation and decentralization may become the next hurdle for those attempting to incorporate digital assets in legacy finance at an international level.