The crypto world was rattled by the news of the potential ban on the use of non-custodial crypto wallets in the European Union (EU), a piece of news that now has more factual insights.
Current Claims In the EU Crypto Wallets Ban
As part of the broader Anti-money Laundering regulation (AMLR), it was reported that the EU has released new laws that target anonymous crypto and cash transactions.
Consequently, crypto transactions committed through non-custodial wallets that have not been verified are banned. In addition, it was said that a majority of the European Parliament‘s leading commission on March 19 approved the decision.
They were described as having a unified stance against these anonymous transactions. The regulation allows for banning self-custody wallets that do not have proper identification, encompassing those facilitated by mobile, desktop, or browser applications.
Furthermore, the public was made to believe that the ban encompasses cash transactions above 10,000 euros and anonymous cryptocurrency payments over 3,000 euros.
EU Ban Impacts Only Non-KYC Based Wallets
However, Patrick Hansen, the director of EU Strategy and Policy at Circle pointed out that the news was just FUD. He went on to clarify that self-custody wallets are not banned from the EU nor are payments to/from self-custody wallets banned. To put it in perspective, the Circle executive explained that P2P transfers are not a part of AMLR, and this same exemption applies to self-custody software and hardware wallets.
The transactions that fall under the so-called ban are paying with crypto, maybe to merchants with a self-custody wallet that has not passed through the necessary Know-your-customers (KYC) procedure. This activity could become more difficult or outrightly banned depending on the merchants set up.
Noteworthy, this is not the first time such a rule has been discussed as it had previously been agreed on a few months ago. Efforts are gradually intensifying with the EU seriously working on getting its Market in Crypto Asset (MiCA) regulation ready for its official launch by the end of this year. Stablecoin regulation is one aspect of the regulatory framework that the authorities in the region are actively working on.
According to the initial news about the supposed ban, the implementation of the endorsed legislation is scheduled to happen within three years of its official promulgation. Observers may still have to look forward to this timeline for the ban on KYC non-compliant crypto wallets.
