Crypto Industry Takes A Dig At The EU Over Restrictions On Unhosted Wallets

The entire crypto industry was irked following the decision taken by the EU Parliament to vote in favour of strict regulations for unhosted cryptocurrency wallets, which include KYC and anti-money laundering rules.

Following the implementation of the new guidelines, service providers in the crypto industry are, required to vigorously verify the identity of any individual in possession of unhosted wallets that transacts with them, and any transactions that are way above 1,000 Euros or $1,100, should be reported to the appropriate authorities for further action.

However, this does not go down well with the CEO of Coinbase, Brian Armstrong, who expressed his displeasure with the outcome of the EU’s decision, calling it absurd. Armstrong makes a little comparison with fiat currency to highlight the unreasonable move of the EU Parliament. He further added that even banks would find it challenging to operate with such legislation.

Armstrong further asks whether the bank will comply with the EU’s directive. The CEO believed that the banks would fight back, which the crypto industry is doing.

Making Sense of The New Proposal

The latest proposal was among the various amendments made to the Transfer of Funds Regulation that was unanimously voted for by the various committees on March 31st.

The EU Parliament must deliberate upon any new rules amongst its tripartite committees. Should the new guidelines be unopposed, the crypto industry will be given 18 months to comply fully with the legislation.

The chairman and CEO of Ledger, a digital wallet company, Pascal Gauthier, made a scathing remark about the EU Parliament by saying that it chooses fear over freedom.

From the look of things, the latest legislation has had a considerable impact on the price of Bitcoin, as it witnessed a 4.5% decline in the past 24 hours to trade at $45,243 at the time of going to press. The price of Ethereum also took a hit by sliding down by 3.7% to trade at $3,282 within the same period.

The decentralized finance firm, Unstoppable, also decries the unpleasant regulation. Still, it remains adamant about a reverse of the new law in the upcoming negotiation between the EU Parliament and the crypto industry.

The head of strategy and business development at Unstoppable, Patrick Hansen, also vented his frustration, calling the new guidelines a disappointment and a threat to individuals’ data privacy.

Crypto Service Providers At The Edge

If allowed to stand, the new regulations will prove difficult for service providers in the crypto industry to flourish, coupled with the fact that service providers will be in a fix as to how to verify an unhosted wallet.

Smaller companies will find it difficult to operate due to additional operational costs, leaving the market to the big players and causing further market consolidation.

There appears to be a ray of light for the crypto industry as some of the members of the various committees are reported to have voiced their criticism of the new guidelines.