The European Union Commission introduced a legislation package that would require cryptocurrency trading and other services providers to collect information from their platform users. This legislation package was introduced on Tuesday, July 20, as a part of a larger effort to bring to a halt money laundering and other financial crimes. Cryptocurrency exchanges have always been completely anonymous and can only be accessed through online wallets or hard drives.
EU Cryptocurrency Crackdown
The EU Commission proposed new rules to force platforms supporting cryptocurrency exchange and other services to collect the details of the senders and receivers, according to EuroNews. The Commission said the aim of the legislation package is to improve the detection of suspicious transactions and activities linked to loopholes criminals use to launder illicit proceeds or finance terrorist activities through the cryptocurrency financial system.
Under the new rules, a company transferring crypto-assets for a customer would be required to include their name, address, date of birth, and account number. The recipient's name must be included as well, BBC added. Last year, the US Treasury's Financial Crimes Enforcement Network called for similar traceability to be enforced in the US, CNet said.
🏦 We are setting up a new EU Anti-Money Laundering Authority.— Mairead McGuinness (@McGuinnessEU) July 20, 2021
It will supervise the riskiest financial institutions.
And it will help national authorities cooperate, so that rules are consistently enforced across the EU.
The allure of cryptocurrency is its anonymity, reasoning that privacy is a key part of the decentralized finance system crypto offers.
Some crypto-asset service providers are already covered by the EU's anti-money laundering and terrorism funding rules, carrying out due diligence on their users. This would bring crypto-assets in line with bank transfers where transactions are traceable.
Anonymous crypt-asset wallets will also be banned under the new law. With the new rules, transactions using cryptocurrencies like Bitcoin will be fully traceable.
The proposals also claim to help the EU crypto-asset industry develop. The industry will benefit from an updated, harmonized legal framework across the EU.
#Cryptocurrency is one of the newest ways to launder money.— Mairead McGuinness (@McGuinnessEU) July 20, 2021
Our rules will now apply to the whole of the crypto sector. We will ban anonymous crypto wallets and make sure that crypto-asset transfers are traceable.
Bitcoin Price Falls after EU News
Bitcoin was able to hit an all-time high of over $62,000 in April, according to CNet, but crashed in the middle of May along with other cryptos across the board. Last month, Bitcoin dropped under $30,000 after China re-committed to banning cryptocurrency mining after its environmental impact when using supercomputers to perform complex mathematical equations to harvest the coins.
In July, Bitcoin has been showing resistance at $35,000, dipping as low as $32,000. With the EU's announcement of the proposed legislation, Bitcoin has dropped below $30,000. As of writing, the 24 hour low was $29,400.19. Currently, it sees a slight recovery at $31,733.
Bitcoin is not the only crypto in troubled waters. The entire market has seen a decline. Dogecoin is low under $0.20, a steep drop from its May high of $0.72. Ether is currently wading through $1,776 after its high of above $4,000, CNet pointed out.
The EU Commission's proposals could take two years to become law, with the EU states and the European Parliament having the final say. The new law would be the foundation of a new EU-wide anti-money laundering authority (AMLA) with oversight of cryptocurrencies by 2023.