A majority of the European Parliament’s lead committees have scrapped the proposed €1,000 limit on cryptocurrency payments from self-hosted crypto wallets as part of new anti-money laundering laws.
On March 19, the European Union’s Economic and Monetary Affairs Committee and the Civil Liberties, Justice and Home Affairs Committee passed the Anti-Money Laundering Regulation (AMLR), which had been provisionally agreed upon by the European Council and Parliament in January.
An earlier proposal that restricted businesses to €1,000 payments when using a self-hosted crypto wallet was removed, along with a provision aimed at implementing identity checks on self-hosted wallets receiving funds.
However, crypto exchanges, referred to as Crypto-Asset Service Providers (CASPs) in the EU, are required to perform “customer due diligence”—identity verification checks—on users conducting business transactions of at least €1,000.
The legislation complements the crypto-focused Markets in Crypto-Assets (MiCA) laws and others, reinforcing existing prohibitions on CASPs providing accounts for anonymous users or dealing with privacy coins like Monero, which obfuscate transaction information.
CASPs must also “apply mitigating measures” to transfers between their platform and self-custody wallets—where users hold their private keys—which includes verifying the identity of the exchange wallet holder when funds from a self-custody wallet are sent.
The laws restrict cash payments to €10,800 (€10,000), with EU member states having the option to set lower limits, and prohibit anonymous cash payments over €3,240 (€3,000).
The AMLR is anticipated to be fully operational within three years, likely in 2027, pending approval from the EU Council and the European Parliament plenary, scheduled for April 10.
In a March 21 post, Pirate Party Germany European Parliament member Patrick Breyer criticised the new laws as a “war on cash.” He expressed opposition to the bill, citing concerns about compromising economic independence and financial privacy, arguing that the ability to transact anonymously is a fundamental right.
EU Committee approves:
🚫Prohibition of cash payments over €10,000
🆔Prohibition of anonymous cash payments over €3,000
₿ Prohibition of anonymous crypto payments to hosted wallets without any thresholdThis means war on cash and gradual erosion of our financial freedom!… pic.twitter.com/gwznD4QZop
— Patrick Breyer #JoinMastodon (@echo_pbreyer) March 21, 2024
The crypto community has shown varied reactions to the EU’s regulatory measures, with some deeming them necessary while others fear potential infringements on privacy and constraints on economic activities.
Daniel “Loddi” Tröster, host of the Sound Money Bitcoin Podcast, highlighted the practical challenges and consequences of the recent legislation, particularly its impact on donations and broader implications for cryptocurrency use within the EU. He expressed concerns about the potential stifling effect of the rules.