On the last day of March, European Union backed crypto traceability rules mean to help the battle against money laundering. Ninety-three EU lawmakers voted for the proposal, with fourteen being against it, and fourteen absent from the vote.
As per the new legislation, crypto companies are required to collect user data, as well as share transaction information with the government.
With EU lawmakers giving the green light to the new rules regarding cryptocurrency transfers, there is hope that the move could put an end to financial crime. However, not everyone agrees. Some believe that, while the new laws could prevent money laundering in short term, it could lead to even bigger problems in the future.
EU to Solve the Crypto-Laundering Problem?
As per the proposal, all crypto companies conducting business within the European Union would have to collect information on transfers of Bitcoin and other digital currencies. The data collected by the crypto firms would have to be stored and shared with authorities upon request.
A result of all this would be that the competent authorities would be able to identify suspicious cryptocurrency transactions. It would also serve as a measure for preventing high-risk transactions, as well as freezing the digital assets of criminals and sanctioned individuals.
The new EU law would also solve the problem of unhosted cryptocurrency wallets, held by individuals rather than crypto exchanges. The legislation would require the owners to keep records of their transactions, as well as notify the authorities every time they make a transaction of €1,000 or more (roughly $1,200).
Not Everyone Is Happy with the Law
Everyone seems to agree that the idea behind the proposal is good, not everyone thinks it’s actually going to lead to good things. Patrick Hansen of crypto start-up Unstoppable Finance called the law a “recipe for disaster” that could cause chaos in the future. According to him, forcing crypto companies to store data could make them a top target to hackers.
Others believe that the new legislation would mean the end of the crypto world as we know it. The requirement for companies and private crypto owners to share transaction data would hinder privacy and anonymity, which are among the key advantages of cryptos over fiat currencies.