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News / No EU-Wide Restriction On Anonymous Crypto Wallets, Says Experts

No EU-Wide Restriction On Anonymous Crypto Wallets, Says Experts

Patrick Hansen states that the EU’s Money Laundering Regulation does not focus solely on cryptocurrencies but it is a more comprehensive regulation framework.

04 min read

The European Union’s strategy for cryptocurrency anonymity calls up vast confusion thus creating a forum for current discussions. Patrick Hansen, the expert industry person, said that this accusation should be cleared without further delay. The EU’s AML Regulation didn’t eventually address crypto problems alone but shared an enhanced framework to demonstrate rules for more general issues.

He indicated that the ordinance would not be a “Crypto regulation,” but a comprehensive one to which all financial institutions shall be subjected. Surprisingly, it covers crypto-asset service providers (CASPs), amongst other things which are more likely to be at risk of money laundering such as digital gambling services, says media sources.

“The AMLR is a provision directly regulated under MiCA that applies to every CASP” Hansen notes. “Such CASPs will need to observe normal KYC/AML procedures like CDD etc.”

The rule is designed to prevent money laundering, online financial fraud, and terrier financing. It refers to the multitude of sectors that are subject to oversight and includes CASPs and other entities that intentionally or unintentionally become a risk in contravention of AML/CFT.

The AMLR contains certain rules for anonymous cryptocurrency wallets and digital assets transactions, despite the rumors of a ban on its operations. Non-custodial wallet providers have been exempted from these regulations’ obligations.

This justification becomes very valuable in assessing the key reasons for which the EU launched a regulatory policy approach. The non-custodial wallet type allows users to control their private keys; it enhances security, and uniqueness, and combines direct asset possession. This exemption represents that the EU wants to develop innovative methods in regulation with new issues related to digital assets.

EU Ensures The Stable Presence Of Crypto Compliance

Through the AML/CFT framework, however, the AMLR has given rise to a set of new rules for all CASPs.  In addition to these, the entities meanwhile operating under the Markets in Crypto-Assets (MiCA) regulations, are required to have a firm grip on KYC/AML processes. That shows that the KYC by itself is not a solution but the implementation of detailed customer diligence measurements.

The regulation involves nullifying the accounts together with custodial crypto-systems where corporate identities are excluded. Such entities are custodial crypto-institutions.  However, the supervision not only involves privacy coins that abide by the internationally acceptable AML standard but also runs under the KYC best practices.

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In addition to this, the narrative by Patrick Hansen tries to explain the fact that the AMLR regulates even the prior AML roles of CASPs and other obligees.

“It does not lay down any new restrictions on transactions like peer-to-peer transfers, wallets, and end-to-end payment transfers.”

The regulatory effects on the European Union’s crypto economy will be “extremely limited” as Hansen mentioned. For many who were worried that the European Union’s recognition system was being overreached, this is a great relief.

EU Proposes Wider AML Regulations

Hansen has prominently put an end to the idea that the “European Union is going to prohibit anonymous crypto wallets and transactions.” He makes a thorough analysis to describe the superior context of this EU’s AMLR regulation.

The European Union’s legislation for cryptocurrencies and associated fields is geared towards achieving the right balance between innovation and the stability of the financial system. This provides comfort to many who were worried that the European Union’s recognition system was being overreached. Initially, Hansen creates a more informed starting point by outlining the AMLR scale and its goal.

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Published Date

March 25, 2024

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