Expected to be unveiled this week, these changes are part of a broader three-year process.
Aimed at updating the EU’s rules on combating money laundering and terrorist financing in the financial sector. Let’s explore more about it.
Privacy Coins and Wallets Under Scrutiny
Three key amendments are expected to be introduced under the Anti-Money Laundering Regulation (AMLR):
- There will be a ban on crypto mixers, tools that facilitate the blending of cryptocurrencies to enhance privacy.
- Users of self-custody wallets will face restrictions on their payment capabilities. This will limit the degree of anonymity associated with such wallets.
- The EU plans to intensify tracking of crypto transfers, enhancing its ability to monitor and regulate transactions.
The EU is making its move to take steps to ban self-custody walletshttps://t.co/g7KmEZWypV pic.twitter.com/icSO8bUZNE
— Mikko Ohtamaa (@moo9000) January 17, 2024
Notably, the new regulations will also target privacy coins, which offer enhanced anonymity features. The outright ban on privacy coins aligns with the EU’s broader efforts to increase transparency in the crypto space.
According to a source, these amendments come as part of a coordinated effort with the Markets in Crypto-Assets regulation (MiCA). The combined impact of AMLR and MiCA represents a comprehensive regulatory framework. It wants to address the evolving challenges posed by cryptocurrencies in the financial sector.
Consequences of EU Banning Privacy Coins and Wallets
One of the anticipated consequences for various crypto entities will be the heightened requirements for user due diligence. These platforms will need to implement more robust mechanisms to verify the identities and activities of their users.
While the specifics of when the AMLR law will come into force are still under negotiation, projections suggest a timeline between 2026 and 2027. The key challenge for crypto advocates lies in ensuring that the AMLR aligns seamlessly with the regulatory clarity established in MiCA.
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