The European Parliament passed a bill to strengthen the management of virtual currencies: restricting privacy coins, self-hosted wallets to strengthen KYC, etc.

This site (120bTC.coM): Earlier yesterday (24th), the European Parliament passed a series of laws to strengthen anti-money laundering and combating the financing of terrorism (AML/CFT). Contains:

• The Sixth Anti-Money Laundering (AML) Directive: passed with 513 votes in favor, 25 votes against and 33 abstentions

• EU "Single Regulation Manual" regulations: passed with 479 votes in favor, 61 votes against and 32 abstentions

• Anti-Money Laundering Authority (AMLA) regulations: 482 votes in favor, 47 votes against Passed with 38 abstentions

Currently, these laws still need to be formally adopted by the EU Council before they can be published in the EU Official Journal. However, Patrick Hansen, Circle’s Director of EU Strategy and Policy, tweeted that the EU Council will also pass this bill and it will officially take effect three years later (about the summer of 2027).

Strengthened Due Diligence

According to a press release issued by the European Parliament, the new law strengthens due diligence measures and checks on the identity of customers, so-called obligated entities, including all financial institutions and entities subject to MiCA (Cryptoasset Market Regulation) regulated CASPs (Cryptoasset Service Providers) must report suspicious activities to Financial Intelligence Units (FIUs) and other competent authorities.

In addition, starting in 2029, top professional football clubs involved in high-value financial transactions, including advertisers and player transfers, will also be required to verify the identity of their customers when dealing with investors or sponsors. , monitor transactions and report any suspicious transactions to FIUs.

The legislation also contains provisions for enhanced supervision of the ultra-rich (those with a net worth of at least €50 million, excluding their main residence), with an EU-wide limit on cash payments of €10,000, between private persons and non-professionals exceptions, and take steps to ensure compliance with targeted financial sanctions and prevent sanctions from being circumvented.

These laws also give FIUs greater powers to analyze and detect cases of money laundering and terrorist financing, and to interrupt suspicious transactions.

Establishment of central supervisory authority AMLA

In order to oversee the new rules against money laundering, a new agency - the Anti-Money Laundering and Combating the Financing of Terrorism Authority (AMLA) - will be established in Frankfurt, Germany.

AMLA will be responsible for directly supervising the highest risk financial entities, intervening in cases of regulatory failure, acting as a central hub for regulators and mediating disputes between them. AMLA will also oversee the implementation of targeted financial sanctions.

Restrictions on self-hosted wallets and privacy coins

After strengthening the inspection of customer identities, whether anonymous encrypted wallets or self-hosted wallets will be banned, Hansen said that they will not be banned. However, non-KYC self-hosted wallets may face restrictions when paying to merchants, depending on the merchant's settings.

Hansen further explained that when processing transfers from CASPs (crypto-asset service providers) to self-hosted wallets, the bill requires risk reduction measures to be taken. This includes conducting blockchain analysis or collecting information about the origin of the transaction. And additional information on endpoints; in terms of merchant transactions, the bill limits cash transactions to €10,000 (approximately $10,830).

In the EU, there are no restrictions on using self-hosted wallets to purchase goods or services. However, if a customer wishes to pay with cryptocurrencies through CASP (such as BitPay), once the transaction amount (single or combined) exceeds 1,000 euros (approx. $1,083), the service provider must authenticate the user and take additional KYC and AML measures.

Additionally, CASP will not be able to provide services for privacy coins, consistent with MiCA’s ban on cryptoassets with built-in anonymity features.

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