- The upcoming vote follows a rejected proposal to limit proof-of-work cryptocurrencies
- The latest revision, among other changes, seeks to strictly manage crypto transfers involving self-hosted wallets
Following last week's rejection of a proposal (in the Markets In Crypto Assets bill) seeking to restrict Proof of Work (PoW) mining, a new EU report focusing on crypto transfers has been tabled.
In a Saturday Twitter thread, Unstoppable Finance's Patrick Hansen shared that the EU Parliament's Committee on Economic and Monetary Affairs is set to hold a vote targeting 'unhosted' wallets.
Hansen, who previously reported on the rejected MiCA proposal, stated that the proposal would crack down on these wallets. He added that the draft piece contains 'absolute red flags' that he went on to list.
The first is a new proposal that requires exchanges and other crypto platforms to log and verify information of unhosted wallets.
"Different from the initial proposal […] the draft now requires to 'verify the accuracy of information with respect to the originator or beneficiary behind the unhosted wallet' but it doesn't say exactly how a crypto service provider should be able to verify the unhosted counterpart," Hansen observed.
Intrusion of privacy
Hansen also identified another proposal that'll mandate companies to report to AML authorities transactions exceeding 1,000 EUR even if they are not flagged as unusual or associated with anti-money laundering. This, the strategist termed 'an absolute violation of privacy rights.'
He highlighted a third 'red flag' in a clause stating, "The Commission should (12 months after entry into application) assess the need of additional specific measures to mitigate the risks posed by transfers from or to unhosted wallets, including the introduction of possible restriction."
A fourth item he took issue with is a clause that requires sharing personal information for any sum of crypto transactions that are not purely P2P.
"While the FATF travel rule only requires these measures for transactions over a certain amount (1k$) and the TFR for fiat (wire transfers etc) only requires the information sharing for transfers over 1kEUR, the draft sets no minimum threshold for crypto transfers," Hansen posted.
Exchanges will suffer a massive blow if the proposal is adopted
Coinbase chief legal officer Paul Grewal through a blog post, implored users to 'make their voice heard' by standing against it. Grewal specifically warned that – if implemented – it "would unleash an entire surveillance regime on exchanges like Coinbase, stifle innovation, and undermine the self-hosted wallets that individuals use to securely protect their digital assets."
The EU's Committee on Economic and Monetary Affairs is expected to vote on the draft proposal as soon as Thursday.