The European Union will vote on amending the Transfer of Funds Regulation today, March 31, 2022. It remains to be seen how the vote will play out, but it is clear that the wording of the draft has raised concerns in the EU. digital currency industry.
The European Parliament will vote on Thursday 31 March on the modification of the regulation on transfers of funds. Their latest scheme could significantly violate individual financial freedom, irreparably damage the cryptoeconomy, and stifle the future of innovation in the EU.
—Faryar Shirzad (@faryarshirzad) March 27, 2022
As usual, experts and industry figures took to social media to denounce the wording of the draft text. Coinbase even participated in a mandatory blog post claiming that the new rules would stifle financial innovation and progress. The usual suspects complained about financial freedom, privacy, and the fact that digital currencies aren’t really used for illicit purposes. None of this has changed anything, and the EU will hold the vote regardless.
So what is it about the draft text that has the industry so seriously worried? Let’s dig in and see what’s on offer.
What the new EU rules would mean for digital currencies
This is the second time in a month that potential EU rules and regulations have spooked the digital currency industry. Not so long ago, the bloc proposed a proof-of-work (PoW) ban which was eventually reversed. Now it proposes that non-hosted wallets should be required to collect information about wallet owners and should potentially reject and report suspicious transactions.
The new rules, if passed, would apply to “non-hosted wallets”, those which are non-custodial third-party wallets such as Ledger, Tezos and MetaMask. These are some of the most popular wallets with users in the digital currency industry today, with tens of millions of users worldwide.
The text of the proposed rule change reads as follows:
“In the event of a transfer of crypto-assets to or from a crypto-asset wallet not held by a third party, known as an “unhosted wallet”, the crypto-asset service provider or other entity obligated party should obtain and keep the required originator and beneficiary information from their client, whether originator or beneficiary.
In addition to collecting user information, non-hosted wallet providers will potentially have to report suspicious transactions and activities to financial intelligence units within the EU. Service providers may even be required to reject or suspend transactions deemed suspicious by a risk analysis.
Those of a libertarian persuasion will no doubt understand some of the concerns expressed about this, but the EU doesn’t see it that way, and it’s the one making the rules. This disconnect between ideology and the reality of how governments will act has been a recurring theme in the digital currency industry so far.
If the vote passes, it will radically change the way digital currency transfers work in the EU. This will undoubtedly place huge burdens on non-hosted wallet providers, but again, the EU doesn’t care. It only cares about its goals as a political entity, and it is notoriously tough on financial crimes, money laundering, and tax evasion. The EU was never going to let Bitcoin and other digital currencies operate freely, given how they have been portrayed over the past few years and given the widespread anti-government and anti-law sentiment within the EU. ‘industry.
It was always coming, and it’s gonna happen everywhere
Slowly but surely people are starting to realize that Bitcoin cannot overthrow governments and allow people to do whatever they want without consequences. This narrative led to disasters like the Silk Road and extremist anarchists like Cøbra touting Bitcoin as a tool to bring the kind of chaos they wanted to see in the world. However, Bitcoin is not suitable for any of this, and its success depends entirely on its compliance with the law.
As we see, powerful governments can use the law to impose their will on industry. We saw in Ottawa how lawmakers could freeze wallets containing millions of BTC with the flick of a pen. We see how even the idea that the EU might require non-hosted wallets to be identity-linked is causing massive panic in the industry.
What happened to the narrative that Bitcoin could resist all of this, and governments were rendered powerless over it? It was a lie all along, and big companies like Coinbase, Binance, and others with teams of lawyers and advisors always knew it. They are for-profit entities, and they will always abide by the regulations to which they are bound, otherwise they will be banned from major markets like the EU, US and others.
Everything is changing before our eyes in the digital currency industry. With bans on anonymous transactions well underway, the US SEC is circling the likes of Ripple and Tether, and Satoshi’s Bitcoin slowly being understood as an electronic payment system designed for small, occasional payments that operates within the law. and who is always subject to it, things are always so slowly changing for the better. If the EU votes to adopt the new rules, it will be another nail in the coffin for the false narrative plaguing the industry.
Watch: CoinGeek New York Panel, Government and Public Sector Applications on Blockchain
New to Bitcoin? Discover CoinGeek bitcoin for beginners section, the ultimate resource guide to learn about bitcoin – as originally envisioned by Satoshi Nakamoto – and blockchain.