EU cash cap and ban on anonymous hosted crypto wallets results in financial paternalism – Patrick Breyer
The majority of the EU Parliament will later today approve far-reaching new anti-money laundering laws: Anonymous cash payments over €3,000 will be banned in commercial transactions. Cash payments over €10,000 will even be completely banned in business transactions. And anonymous cryptocurrency wallets operated by providers (hosted wallets) will be prohibited without a threshold.
MEP and digital freedom fighter Dr. Patrick Breyer (Pirate Party) explains his vote against as follows:
“This EU war on cash will have nasty repercussions! For thousands of years, societies around the world have lived with privacy-protecting cash. With the creeping abolition of cash, there is a threat of negative interest rates and the risk of banks cutting off the money supply at any time. We remember credit card companies cutting off Wikileaks from donations. Our dependence on banks is increasing at an alarming rate. This kind of financial disenfranchisement must be stopped.
Generally prohibiting anonymous payments will at best have minimal effects on crime, but it will deprive innocent citizens of their financial freedom. The medicines or sex toys I buy is nobody’s business. To collect donations, dissidents such as the late Alexei Navalny and his wife are increasingly reliant on anonymous donations in virtual currencies worldwide. Where every financial transaction is recorded forever, this creates a honey pot for malicious hackers and law enforcement as well as a chilling government shadow over every purchase and donation.
Instead, we need to think about ways we can bring the best attributes of cash into our digital future. We have a right to pay and donate online without our personal transactions being recorded. If the EU believes it can regulate virtual currencies at a regional level, it hasn’t understood the global nature of the Internet.”
Background on the cash limit:
There was a great public outcry when the Commission asked the public for their opinion on limiting cash payments in 2017. More than 90% of responding citizens spoke out against such a step. Respondents considered paying anonymously in cash an “essential personal freedom” and that “Restrictions on payments in cash are ineffective in achieving the potential objectives (fight against criminal activities, terrorism, tax evasion)”. According to an ECB survey up to 10% of citizens use cash even for amounts greater than 10.000 € (e.g. buying cars). According to calculations by shadow economy expert Friedrich Schneider of the University of Linz, banning large cash payments would have “only minimal lowering effects on crime”.
Background on “virtual cash”:
Unlike cash, which is entirely anonymous, transactions carried out with cryptocurrencies can, in the case of Bitcoin, be traced on the “blockchain”. Law enforcement has again and again been successfully prosecuting such criminals by detecting unusual patterns and identifying suspects. Some criminals have eventually de-anonymized themselves, and every criminal will need to eventually exchange their digital funds for real money. Virtual Assets are of minor relevance to the global financial system. There is insufficient evidence on the volume and frequency of the usage of cryptocurrencies for money laundering. EU rules would be easy to circumvent due to the global nature of the Internet. Virtual Assets can technically be transferred directly from one person to another without using intermediaries, which makes them impossible to regulate. Where Virtual Assets have been used for criminal activities in the past, prosecution has been possible on the basis of the current rules.
