Criminal activities and the financing of terrorists were the driving forces behind the decision.
A new regulation out of the European Union’s Anti-Money Laundering (AML) bans and criminalizes the use of anonymous self-custody crypto wallets for cryptocurrency payments of any value. Part of the new anti-money laundering rules in the EU is this ruling.
According to a post by Patrick Breyer, the majority of the lead commission of the EU Parliament endorsed this ban. Two party leaders, including Breyer of the Deutsch Piraten Partei, who sits in the European Parliament, were against the approval. Another member of Parliament to cast a negative vote was Gunnar Beck, who was representing the AfD party in Germany.
It will be more difficult for illegal acts like money laundering and terrorist funding to go undetected as a result of the new prohibition on anonymous bitcoin wallets imposed by the European Union. There will be less opportunity for illegal use of the cryptocurrency market if authorities are able to monitor and trace transactions using identified crypto payments. By harmonizing with preexisting anti-money laundering systems, these rules provide a unified strategy for dealing with new threats.
Opponents say people should be able to keep their financial information private, while supporters say the advantages of increased security far exceed the ability to remain anonymous while making purchases. The European Union is trying to find a middle ground between people’s right to privacy and the need to fight financial crime. Although these standards are expected to be enforced in three years, experts expect compliance to be hastened since enhancing financial control and security is an urgent need.
The crypto industry faces several hurdles due to the new EU anti-money laundering (AML) rules. A prohibition on anonymous transactions will first and foremost limit the privacy and anonymity that people love about cryptocurrencies. The second point is that users and developers alike depend on privacy features, and limits might make it harder for certain groups to participate in financial inclusion. Suppressing innovation may also stunt the cryptocurrency industry’s development. Lastly, the potential impact on trust and investment due to the elimination of anonymity might discourage broad adoption. When taken as a whole, these rules have the potential to have negative economic effects, which would dampen enthusiasm for and investment in the cryptocurrency sector.
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