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Haider Jamal

Mar 25, 2024

New Payment Limit For Crypto Wallets Scrapped By European Union

The recent Anti-Money Laundering regulations in the European Union impose restrictions on cash and certain crypto transactions, but proposed limits on noncustodial wallets were not included in the final version.

As of now, the key committees have removed a proposed 1,000 euro cap on cryptocurrency payments regarding self-hosted crypto wallets as part of these new laws. The legislation, passed on March 19th, aligns with the provisions agreed upon by the European Council and Parliament in January.

 

More Regulations

Previously suggested restrictions, such as limiting businesses to 1,000 euros for transactions using self-hosted crypto wallets and implementing identity checks on recipients of funds, have been discarded. However, Crypto-Asset Service Providers (CASPs) in the EU are required to conduct identity verification checks on users engaging in business transactions of at least 1,000 euros.

These laws complement existing regulations, such as the Markets in Crypto-Assets (MiCA) laws, and reinforce prohibitions on CASPs offering accounts to anonymous users or dealing with privacy coins like Monero (XMR), which conceal transaction details.

CASPs are also mandated to take steps for transfers between their platform and self-custody wallets, including verifying the identity of the exchange wallet holder for funds sent through a self-custody wallet. Furthermore, the regulations cap cash payments at 10,000 euros, with member states having the option to set lower limits, and prohibit anonymous cash transactions over 3,000 euros.

 

A Mixed Bag

The full implementation of the AMLR is anticipated within three years, potentially by 2027, pending approval by the EU Council and the European Parliament plenary session scheduled for April 10th. Patrick Breyer, a member of the Pirate Party Germany in the European Parliament, criticized the new laws in a recent press release, arguing that they compromise economic independence and financial privacy, considering anonymous transactions a fundamental right.

The response by the crypto community to these regulatory actions by the European Union has been mixed, to say the least. While some view the regulations as necessary, others express concerns about potential privacy infringements and limitations on economic activities.

Daniel Tröster, host of the Sound Money Bitcoin Podcast, highlighted practical challenges and consequences of the legislation, particularly its impact on donations and cryptocurrency usage in the EU, expressing worries about its restrictive effects.

 

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