The biggest risk is not taking any risk. In a world that's changing really quickly, the only strategy that is guaranteed to fail is not taking risks

European regulators want to increase transparency of cryptocurrency transactions

EBA wants to limit the anonymity of cryptocurrencies in Europe Dwain Ross ★★★★

The European Banking Authority wants to force cryptocurrency companies to provide more information about their customers' transactions. This includes for so-called "cold" cryptocurrency wallets.

The latest twist to anonymity when it comes to cryptocurrency transactions. On Friday, the European Banking Authority (EBA) launched a public consultation "aimed at preventing certain transfers of cryptoassets for the purposes of money laundering and terrorist financing."

More specifically, the authority wants to oblige digital asset service providers (e.g. crypto exchanges) to systematically identify each cryptocurrency storage transaction on a crypto wallet and verify that the crypto address in question actually matches the customer's address.

Recall that a cold wallet stores the user's private key offline (computer, phone). But it can also be used to conduct transactions for users (exchanging on decentralized platforms, sending cryptocurrencies, buying NFT) if it is connected to the network and used through software.

Is anonymity coming to an end?

So, anonymity in offline cryptocurrency transfer and storage may end in Europe. Everything can be strictly identified. In the same vein, these proposals stipulate that service providers will be required to use completely transparent and interoperable crypto-protocols to make it easier to track flows.

From now on, every effort will be made to ensure that the transparency criteria used in traditional finance are met as closely as possible, and whoever fails to meet these obligations will no longer be able to operate in Europe. The EBA has opened a public consultation until February 2024 to reflect on its decision, but it is clear that the regulatory noose is being tightened ever tighter and there is a real risk that only large authorized platforms will remain in the market, given the criteria that need to be met, which are increasingly moving towards the end of anonymity.

The EBA's proposal has caused mixed reactions in the crypto community. Some believe it is necessary to combat money laundering and terrorist financing, while others believe it will limit the legitimate use of cryptocurrencies.

Comments (0)