EU bans anonymous crypto wallet to combat money laundering

The EU has introduced a new directive that outlaws transactions using anonymous, privately managed crypto wallets for any transaction value.

A European Parliament representative revealed that the directive received approval from the majority of the EU Parliament’s leadership committee on Thursday.

This latest regulation, aimed at combating money laundering, sets limits on cash transactions and bans all anonymous cryptocurrency transactions. Specifically, it makes any cash transaction over €10,000 and any anonymous cash transaction over €3,000 illegal.

EU legislation

The legislation targets transactions from private, unregistered crypto wallets to regulated service providers, effectively limiting their use due to the inherently anonymous and permissionless characteristics of cryptocurrency networks.

The regulation mandates enhanced monitoring of cryptocurrency asset transfers and requires crypto businesses to implement rigorous due diligence practices to deter money laundering. The scope of entities required to adhere to these regulations has expanded to include most of the cryptocurrency industry, necessitating thorough customer background checks.

The legislation also emphasizes the necessity for detailed records of actual beneficiaries, aiming to disclose the real owners or controllers of legal entities. This initiative will compel a broad spectrum of entities, including banks, real estate firms, and cryptocurrency businesses, to intensify their customer verification processes.

The latest EU regulations are significantly changing how crypto is offered, managed, and traded in the region. Last week, leading exchange OKX announced the delisting of USDT trading pairs in the region, following the rules imposed on stablecoins by the forthcoming MiCA regulations.