- Patrick Hansen addresses and corrects misunderstandings about the impact of the EU’s Anti-money Laundering Regulation on crypto anonymity.
- AMLR focuses on crypto-asset service providers with significant requirements but spares non-custodial wallet providers from its scope.
- Despite early concerns, the regulation’s effect on the broader crypto market and practices such as self-custody of wallets and peer-to-peer transfers is minimal.
Industry expert Patrick Hansen has addressed and clarified earlier reports and discussions about the European Union’s cryptocurrency anonymity policy. His analysis aimed to correct common misunderstandings surrounding the regulation’s impact on anonymous cryptocurrency wallets and transactions.
Hansen’s discourse revealed the Anti-Money Laundering Regulation (AMLR) as not an attack on cryptocurrency. Instead, it is a framework designed for anti-money laundering (AML) and counter-terrorism financing (CFT) that spans both financial and selected non-financial sectors.
Hansen highlighted that the regulation does not affect non-custodial wallet providers. Its main impact lies with crypto-asset service providers (CASPs), such as exchanges and brokers, especially those regulated under the Markets in Crypto-Assets (MiCA) framework.
These CASPs are required to implement rigorous know-your-customer (KYC) and AML procedures. The regulation effectively prohibits anonymous accounts and transactions within custodial crypto services and extends to barring accounts for privacy-centric cryptocurrencies, which is in line with global AML standards.
However, Hansen critiqued certain aspects of the AMLR but stressed that the regulation mostly reaffirms existing AML/CFT guidelines for CASPs and other regulated entities. He said that the regulation’s impact on the cryptocurrency sector in the EU is “extremely limited,” alleviating fears of a blanket ban on anonymous crypto transactions.
Contrary to earlier reports, Hansen’s analysis stresses that AMLR’s effect on the broader crypto market and practices such as self-custody of wallets and peer-to-peer transfers remains minimal. This clarification comes amidst initial concerns about a potential EU-wide prohibition on the use of non-custodial crypto wallets as part of the AMLR.
Misinterpretations suggested that transactions through anonymous non-custodial wallets were banned. This reportedly followed a decision by the majority of the European Parliament’s leading commission on March 19.
The commission was reported to have taken a unified stance against anonymous transactions. The regulation purportedly bans self-custody wallets that lack proper identification and limits cash transactions to over 10,000 euros and anonymous cryptocurrency payments to above 3,000 euros.
The implementation of this endorsed legislation was scheduled to unfold over the next three years from its formal announcement. It is expected that the timeline could remain the same.
