EU Makes Anonymous Cash and Crypto Payments Illegal: What You Need to Know
In a recent regulatory development, cryptocurrency payments of any size using unidentified self-custody crypto wallets are now illegal in the European Union (EU). This decision is part of a set of new anti-money laundering laws (AML) in the continent. The majority of the EU Parliament’s lead commission approved the prohibition on March 19, according to Patrick Breyer’s post. Notably, Dr. Breyer is a member of the European Parliament for the Deutsch Piraten Partei and one of the two leaders who opposed this approval. Gunnar Beck was the other Parliament member who voted against it, representing the Alternative for Germany (AfD) party.
EU’s New AML: Cash and Crypto Payments Made Partially Illegal
In particular, the new anti-money laundering law prohibits certain thresholds for cash payments and any anonymous crypto payment. On that note:
- Any cash payment above €10,000 will become illegal
- Anonymous cash payments above €3,000 are also prohibited
The prohibition for payments made in cryptocurrencies will be specific to unidentified wallets operated by providers (hosted wallets). This includes any self-custody wallet provided by mobile, desktop, or browser applications. Furthermore, the now-approved AML package will apply after three years from its entry into force, according to Dillon Eustace. However, the Ireland law firm expects these laws to become fully operational before the usual enforcement timeline.
Patrick Breyer’s Position on Making Anonymous Cash and Crypto Payments Illegal
Breyer is skeptical about the effectiveness of fighting crimes through these laws. Moreover, he highlighted how anonymous payments are a fundamental human right, needed to achieve individual financial freedom. In his words:
“Generally prohibiting anonymous payments would at best have minimal effects on crime, but it would deprive innocent citizens of their financial freedom. (…) We have a right to pay and donate online without our personal transactions being recorded.” – Patrick Breyer
From another perspective, the Piraten Partei’s representative pointed out to the negative economic and social effects of prohibiting sovereign payments. He stated:
“This EU war on cash will have nasty repercussions! For thousands of years, societies around the world have lived with privacy-protecting cash. With the creeping abolition of cash, there is a threat of negative interest rates and the risk of banks cutting off the money supply at any time. Dependence on banks is increasing at an alarming rate. This kind of financial disenfranchisement must be stopped.” – Patrick Breyer
What Do EU Citizens Think About AML Prohibiting Cash and Crypto Payments?
Historically, European citizens have already shown resistance against cash payment prohibition of any kind. Patrick Breyer described a “great public outcry” in 2017 when the Commission consulted the public about limiting cash payments. More than 90% of responding citizens spoke out against such a step. Respondents considered paying anonymously in cash an “essential personal freedom” and that “Restrictions on payments in cash are ineffective in achieving the potential objectives (fight against criminal activities, terrorism, tax evasion).” Additionally, the shadow economy expert Friedrich Schneider believes these measures would have “only minimal lowering effects on crime.”
Conclusion: The Impact on Financial Freedom and Human Rights
In conclusion, the new anti-money laundering law will effectively prohibit cryptocurrency payments through self-custody wallets. Essentially, most crypto networks operate in permissionless networks, where anyone can generate a cryptographic private key, gaining unlimited access to the system. This is one of the core value propositions of cryptocurrencies, as a more accessible, free, and fair approach to finances, which makes no distinction of any kind on its users.
Experts and freedom advocates consider this recent approval a tough hit against financial freedom and fundamental human rights. On X (formerly Twitter), commentators talk about the resemblance to the dystopic society introduced by George Orwell in the best-seller “1984.” European citizens and entrepreneurs now wonder if the EU Parliament will have the political strength needed to sustain this approval moving forward.
Hot Take: The Future of Cash and Crypto Payments in the EU
The new anti-money laundering laws in the EU have sparked controversy and concern among citizens and experts alike. While the intention behind these laws is to combat financial crimes, there are serious implications for financial freedom and privacy. Here are some key takeaways:
- The prohibition on anonymous cash payments above €3,000 and crypto payments using unidentified wallets will limit individual financial freedom.
- Citizens have expressed their opposition to these measures, considering anonymous cash payments as an essential personal freedom.
- Experts argue that these laws will have minimal effects on crime and could lead to negative economic and social consequences.
- The impact on cryptocurrency networks, which prioritize accessibility and inclusivity, could hinder their growth and adoption.
As the EU moves forward with implementing these laws, it remains to be seen how they will be enforced and whether they will face further opposition. The debate between security and privacy continues in the digital age, raising important questions about the balance between combating financial crimes and preserving individual rights.
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