These Coins May Be Banned Under New EU Legislation

The European Union could start banning banks and cryptocurrency providers from offering services related to privacy coins such as Monero, Dash, and Zcash. The announcement followed a leaked draft of a money laundering bill before the EU legislators.

EU could ban privacy coins

Officials from Czech are chairing the discussions related to this bill. If this bill is passed, it would be the latest move that undermines the use of privacy coins. These coins have become popular means of payment amid tough regulatory laws over the summer.

Part of the bill says that crypto asset service providers, financial and credit institutions would be barred from using coins that promote privacy. CoinDesk obtained a draft of the bill.

While speaking to Coindesk, a diplomat from the EU said that the bill would lower the risk coming from cryptocurrency assets that have been created to avoid traceability. Privacy coins prevent the traceability of transactions on the blockchain.

The proposal by Czech is a response to countries negotiating the bill’s contents. The European Commission passed the Anti-Money Laundering Regulation in July 2021. The regulation was part of a broader proposal seeking to ban large cash transactions while paving the way for creating a new anti-money laundering agency.

Czech proposes that crypto asset service providers be required to verify the identity of customers even when transactions are below 1000 euros. It also wants a probe to be conducted on large transactions.

This proposal will ensure that crypto asset service providers have a stricter regulatory framework than banks. In the traditional banking sector, due diligence only applies to large payments. However, in the crypto space, there are concerns that crypto transactions could be split into smaller transactions.

Crypto firms conducting business outside the EU must also confirm licensing and ensure that they have the appropriate money laundering checks in place. The AMLA will discuss the vetting process.

The amendments to this bill also address money laundering schemes within the metaverse, decentralized finance, and non-fungible tokens (NFTs). The bill needs to be voted upon by the Council and the European Parliament for it to be passed into law.

If this bill is passed, it will join the many bills that the EU is passing to combat online anonymity. According to regulators, anonymous transactions can be used to evade sanctions, launder criminal proceeds, or finance terrorism.

The battle over privacy coins

Anonymous crypto transactions have been a contentious issue for global regulators. In August, the US Treasury sanctioned Tornado Cash, a crypto mixer tool. The tool is believed to be used by North Korean hackers to launder funds stolen from cryptocurrency protocols.

The EU has also agreed on the Markets in Crypto Assets regulation (MiCA) law that has yet to be passed. This law will prevent cryptocurrency exchanges from supporting privacy coins unless the holders of the coins have been identified. Similar rules also propose extra checks when transferring funds related to privacy coins.

Related

• EU confirms a ban on providing crypto services to Russians
• EU’s Makes History with Regulatory Step
• EU agrees on a provisional deal to regulate crypto assets