EU wants to ban crypto anonymous transactions and wallets

[Obito]

We aren't even as private anymore, I mean we haven't had that kind of thing ever since the towers in 2001 fell, they've been listening to our phone calls after that even though they don't admit it because they don't want that kind of tragedy from ever happening again. I think that the total removal of anonymity isn't going to be the best thing to do for this one, probably being able to access the information of a certain address only by the authorities should be the way to go as a compromise.

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[Brus123]

I have no idea how EU authorities want to control and reprogram blockchain. I think it is impossible, because it is decentralised (I talk about Bitcoin and Ethereum), so you can’t come to the head and order to ban anonymous transactions.
They can do so with centralised exchanges, but when it comes to transfer of assets, they can’t ban such transactions.

[aysg76]

This I believe may affect Bitcoin, at least as we know it so far:

"In particular, the EU would ban anonymous crypto asset wallets, according to an EU fact sheet, with the European Commission saying that systems like Bitcoin should be governed by the same rules as regular bank wire transfers."

In other words, for each transaction they want to identify the user who sends and the user who receives the transaction, which is easy if one of the parties is a registered exchange user. If the other party is not identified, the transaction is blocked.

I don't know how those who have their funds in hardware wallets and don't want to identify themselves would be. I suppose that at least they would be very limited in their ability to send funds. And then banning anonymous wallets is another blow to privacy.

I don't know what you think about how this could end up.

The main reason for creation of bitcoin was not to include any third-party intervention in fund transfer globally but that is what government fears because they don't want anything to go off the radars and we all are being under supervision each time.But with the bitcoin gaining now popularity government don't want to ban them due to tax revenue and economy boost and on the same side want to control it also and that's why coming up with shitty reasons and lame excuses.If both the parties indentity is known the government and banks will intervene asking for some more details about the transaction and impose certain restrictions.But bitcoin is being decentralised and you can't control it anyway so any such regulations won't work but yes they can try it with their CDBC yet to be launched and impose as many restrictions they want.But bitcoin comes with freedom of your funds.

[TheGreatPython]

In other words, for each transaction they want to identify the user who sends and the user who receives the transaction, which is easy if one of the parties is a registered exchange user. If the other party is not identified, the transaction is blocked.

I don't know how those who have their funds in hardware wallets and don't want to identify themselves would be. I suppose that at least they would be very limited in their ability to send funds. And then banning anonymous wallets is another blow to privacy.

I don't know what you think about how this could end up.

I just wonder why no government is taking any step to prohibit the usage of VPN but they are concerning only about the anonymous transactions in crypto space. If all the governments look for regulating anonymous transactions and then they will realize their failure later from achieving that hence they will simply move on by agreeing with evolution of technology along with individuals' privacy.

Governments cannot do anything about barter system and similarly they cannot do anything about anonymous transactions and individual's privacy.

[South Park]

What I don't get is how would they even enforce their plans? Am I missing something? How would they ban Monero wallets from being downloaded and then block transactions? This is bogus, seriously. They can't do shit about it.

It will be the same as almost any other law: law abiding citizens will follow the law, while criminals don't care. It's the same as for instance gun laws: where I live normal people don't have them, but it doesn't stop criminals.

Maybe they hope for the countries or the EU to turn into an area where denunciation becomes a thing again. If I know somebody who owns Monero and I denigrate that somebody, I might even benefit from it in some way. Otherwise I don't get the point. The only way to catch every single thing that you as a state deem criminal is to give up freedom as a concept and turn your area into a full police state. Even then you will have criminals. The death penalty doesn't even keep freaks from raping and killing others.

I think that LoyceV is right, they are just trying to scare people away from cryptocurrencies and this is because politicians themselves are scared about the concept of a form of money that they cannot control so they are using everything that they have in the form of laws and misinformation being spread by the media to try to hinder the development of this market, so laws like this one are not really meant to be effective but rather are a message to the population that the government is not going to tolerate this and most citizens will just obey as always.

[Ayiranorea]

Individual privacy is much concerned. In the name of governance there are very big restrictions on different nations which we could've never thought. Recently read an article in which a government itself have used a software named Pegasus to record the communication made by the people, particularly the political people. This is how the governments working, in such situation people want freedom and for that people prefer anonymity. Governments weren't able to disturb the anonymity of the network that's a big suffering for them.

[Sithara007]

An interesting question: If KYC is not possible for open source wallets like electrum, would they be banned in future from github? And in future you might need p2p software to download a bitcoin node, since they won't be allowed on any webserver that government can identify the owner and give them KYC responsibility

These measures are applicable only for the European Union, right? So how can GitHub ban open source wallets, in case they don't conform with the EU regulations? At the most, they can issue a geo-block for the IPs from the EU region (I don't know whether that is even possible with GitHub). But even if such a block is there, anyone can download the software using a torrent website or a VPN. But we need to be prepared for such challenges posed by the government authorities, as many of the governments are increasingly turning hostile to cryptocurrency.

[jaysabi]

What makes you think that will happen?  Bitcoin was outlawed in China and did we see a bunch of underground exchanges open up, or did we see a mass exodus of bitcoin leaving China while people could still exchange it legally before the crackdown?  We saw the latter, so there's no reason to think that there's going to be a bunch of illegal exchanges popping up to try and get around the law when it becomes illegal to operate one.

There is no need for any new "illegal" exchange. Here in India, less than half of the trading volume is nowadays done through the mainstream exchanges. Hostile government actions since 2018 has made many of the users move to P2P platforms and DEX exchanges. I guess this is the case with China as well. When the legal exchanges closed down, many of the users might have moved to P2P platforms (although doing this in a dictatorship like China is much more than doing the same in India).

Some of that might be happening on an extremely small scale if anyone wants to risk prison time over holding bitcoin and having to transact under the radar forever.  The tradeoffs there seem way out of whack so I don't know how common that's gonna be, but I'd guess not at all.  What we know is much more common is people just selling out of bitcoin, which is why the price tanked below $30k.  There was a flood of people in China rushing to get out to comply with the law, which created a ton of new supply and crushed the price.

[fulcare]

I'm in no way supporting this draft, but most people here in the thread got the news wrong (so far, mainly mu_enrico got it right). Before the thread degenerates entirely:

The EU is not planning to ban anonymous "transactions", but anonymous "centralized wallet services"!

The planned legislation is based on the FATF travel rule. It is directed to companies who control cryptocurrency on behalf of their users, i.e. exchanges, web wallets, brokerage services and so on, and some other companies (e.g. in the real estate business). Most of them in several EU states are already forced to do KYC, so in these countries there would be only minor policy changes. These would have to record the data of the transaction sender and receiver if they participate in one (i.e. a deposit on a centrally managed wallet, or a transaction to a real estate agent affected by the law). It's affecting entities that are already obliged to record these data when they receive bank wires or other fiat-based transactions.

So no, your Bitcoin Core, Electrum etc. are not affected.

This may however affect services like the providers of smartphone wallet software, maybe also blockchain.com or Blockstream's Green Wallet (although at least in the latter two cases I think they could rebrand the service as a kind of "backup service for keys" or so). In any case the keys have to be managed by a central entity.

I don't blame the thread participants, the Bloomberg article isn't "wrong" but pretty poorly written so it can be misinterpreted.

Anyway, I consider this planned legislation extremely harmful. It would place the KYC burden on more companies than now, also potentially on smaller companies; this would mean more targets to hacker attacks, and potentially more danger of identity theft. So the EU is trying to combat one type of crime (money laundering) making other, potentially more threatening types of crime (identity theft) easier.  

Thanks d5000 for the explanation. Although it is an obvious one, I didn't really think about KYC that way, but you are of course right. Legislators' goal to fight money laundering leads to more KYC burdens, which in turn makes any of the companies suffering from more KYC requirements an even more attractive goal to hackers. That in turn leads to more investment in security measures, that again hits the bottom line of those companies and rather leads to larger corporations who can afford security requirements financially, which again leads to further centralization of the industry... That are a lot of in turns, I know, but isn't that the way it will ultimately work out?

[Vishnu.Reang]

Some of that might be happening on an extremely small scale if anyone wants to risk prison time over holding bitcoin and having to transact under the radar forever.  The tradeoffs there seem way out of whack so I don't know how common that's gonna be, but I'd guess not at all.  What we know is much more common is people just selling out of bitcoin, which is why the price tanked below $30k.  There was a flood of people in China rushing to get out to comply with the law, which created a ton of new supply and crushed the price.

Obviously the majority want to comply with the law and that is the reason why there was mass-selloff in China. Even in India, when the bill on cryptocurrency was first proposed in 2018, a lot of the users sold their holdings. But here the users are more rebellious and a large section went vocal in social media. As a result of the campaign, the government relented and shelved the cryptocurrency bill. But the status of cryptocurrency in India is still in suspended animation. It is still not 100% legal. This creates issues while filing tax returns.

[South Park]

Some of that might be happening on an extremely small scale if anyone wants to risk prison time over holding bitcoin and having to transact under the radar forever.  The tradeoffs there seem way out of whack so I don't know how common that's gonna be, but I'd guess not at all.  What we know is much more common is people just selling out of bitcoin, which is why the price tanked below $30k.  There was a flood of people in China rushing to get out to comply with the law, which created a ton of new supply and crushed the price.

Obviously the majority want to comply with the law and that is the reason why there was mass-selloff in China. Even in India, when the bill on cryptocurrency was first proposed in 2018, a lot of the users sold their holdings. But here the users are more rebellious and a large section went vocal in social media. As a result of the campaign, the government relented and shelved the cryptocurrency bill. But the status of cryptocurrency in India is still in suspended animation. It is still not 100% legal. This creates issues while filing tax returns.

Which is precisely why they do this, they know that people want to comply with the law because they do not want to have problems with the government, however there are scenarios in which this is not true, for example if the fiat currency in your country is crashing and losing value almost every single minute then people are going to try to find ways to protect their capital and one of those options is bitcoin, that is when governments are going to get harsher with the laws and the measures that they take against people holding cryptocurrencies but in that scenario people will choose to actively disobey the law because they have no other option, they either disobey the law or they go hungry.

[d5000]

Legislators' goal to fight money laundering leads to more KYC burdens, which in turn makes any of the companies suffering from more KYC requirements an even more attractive goal to hackers. That in turn leads to more investment in security measures, that again hits the bottom line of those companies and rather leads to larger corporations who can afford security requirements financially, which again leads to further centralization of the industry... That are a lot of in turns, I know, but isn't that the way it will ultimately work out?

This is one possible outcome - a rat race between the security systems of service providers and hackers.

Higher KYC burdens can also have indirect, positive side-effects. They could strengthen completely decentralized services without middlemen, like atomic-swap-based exchanges. This would be of course positive because it strengthens the decentralized nature of Bitcoin, and injects liquidity in Atomic-swap exchanges and services like the (currently struggling) OpenBazaar, which are currently not really popular.

But the problem is that there are companies which are required to do KYC which cannot be circunvented or "decentralized" that easily. For example, real estate services, or "officially recognized" notaries. For these, the centralization effect may have exclusively negative effects.

Also there are people who simply need (or "think to need") a custodial service, because of lacking technical knowledge. These would have no way to get these services without KYC and transaction recording, and thus be even more exposed to identity theft than today.

[Ozero]

This I believe may affect Bitcoin, at least as we know it so far:

"In particular, the EU would ban anonymous crypto asset wallets, according to an EU fact sheet, with the European Commission saying that systems like Bitcoin should be governed by the same rules as regular bank wire transfers."

In other words, for each transaction they want to identify the user who sends and the user who receives the transaction, which is easy if one of the parties is a registered exchange user. If the other party is not identified, the transaction is blocked.

I don't know how those who have their funds in hardware wallets and don't want to identify themselves would be. I suppose that at least they would be very limited in their ability to send funds. And then banning anonymous wallets is another blow to privacy.

I don't know what you think about how this could end up.

States will always strive to control cryptocurrencies as much as possible. Therefore, it will be a long-term confrontation between the people and the government. Of course, if funds in cryptocurrency are transferred through the exchange, then the states have the opportunity to control this process. However, they cannot control transactions between citizens. Yes, states justify such control by the need to combat money laundering and the financing of terrorism. However, an Interpol report in January showed that criminals use cryptocurrencies very little in committing crimes and that cash traditionally holds the primacy here.

[Lanatsa]

States will always strive to control cryptocurrencies as much as possible. Therefore, it will be a long-term confrontation between the people and the government. Of course, if funds in cryptocurrency are transferred through the exchange, then the states have the opportunity to control this process. However, they cannot control transactions between citizens. Yes, states justify such control by the need to combat money laundering and the financing of terrorism. However, an Interpol report in January showed that criminals use cryptocurrencies very little in committing crimes and that cash traditionally holds the primacy here.

They should realized that stuff that even cryptocurrency market is already progressing but still criminals do much still prefer on making use of fiat.It is just crypto do really took the blame which it had

been accused that criminality rate had risen up because of its existence which isn't still proven out but its safe to presume that because of decentralization plus having that anonymity then I couldn't really

blame on why people do really have that kind of impression.Government would be having always on the hunt on whatever possible transactions that they could trace on.

[Mometaskers]

All under the guise of protecting against terrorism and fighting money laundering again. More likely, they'll just hit someone trying to make a living out of crypto, if they haven't already.

This is disappointing news since EU policies can affect systems even outside their borders. The question is, what do we do once these restrictions are in place?

[AmoreJaz]

States will always strive to control cryptocurrencies as much as possible. Therefore, it will be a long-term confrontation between the people and the government. Of course, if funds in cryptocurrency are transferred through the exchange, then the states have the opportunity to control this process. However, they cannot control transactions between citizens. Yes, states justify such control by the need to combat money laundering and the financing of terrorism. However, an Interpol report in January showed that criminals use cryptocurrencies very little in committing crimes and that cash traditionally holds the primacy here.

They should realized that stuff that even cryptocurrency market is already progressing but still criminals do much still prefer on making use of fiat.It is just crypto do really took the blame which it had

been accused that criminality rate had risen up because of its existence which isn't still proven out but its safe to presume that because of decentralization plus having that anonymity then I couldn't really

blame on why people do really have that kind of impression.Government would be having always on the hunt on whatever possible transactions that they could trace on.

the media is one culprit why they have negative outlook towards crypto. they should dig deeper if they want true information on what's going on with this technology. because it is true, that up until now, fiat is still the leading currency when it comes to money laundering and other illegal activities.
if they will not change their outlook on this matter, they will be left behind by other countries when it comes to crypto-related businesses.

[dezoel]

This is really bad news. I don’t like such news. right from time the government has been doing whatever they could to stop people from using cryptocurrency, and they have seen that there isn’t a way that they will be able to do that, So, what they have done now is to accept it and look for a way to regulate it and also stop the privacy.

I’ve been seeing such news since last year, where they kept saying that centralized exchanges would be used as a way for the government to fully regulate cryptocurrency and remove every sort of privacy involved. And the article I read last year clearly explained that the same way that you have said it here that the verified addresses would be used as a way to get the ones that are unverified.

[skarais]

Control and control and that will continue to be desired by the government for its people. The government will not give absolute freedom to the people to manage themselves and their money independently for any reason.

Usually the classic reason put forward is preventing money laundering and other crimes with bitcoin but KYC on bitcoin will only kill user privacy. I can think that governments are actually displeased with financial freedom they can't control like bitcoin, so there's always a reason why they should regulate it. Regardless of their reasons then user control is the obvious reason they want for all bitcoin users in their country.

[Webetcoins]

All under the guise of protecting against terrorism and fighting money laundering again. More likely, they'll just hit someone trying to make a living out of crypto, if they haven't already.

This is disappointing news since EU policies can affect systems even outside their borders. The question is, what do we do once these restrictions are in place?

I am not sure whether this is going to work out, and I am really not wishing that it works out because I am not going to like the idea of the government regulating cryptocurrency especially bitcoin. But in a situation, whereby this happens to be a success for them to carry it out, then we would all be left with no other option than to accept the regulation or we just have to forget about our assets, which I don’t think a lot of us would like to do.

At the end, we are all still going to choose to accept the regulation rather than forfeit what we have. But, I think where the problem would be starting from is from people who are making use of centralized exchanges.

So, if it would be possible for everyone to switch to wallets and exchanges that are decentralized, I believe that the government wouldn’t have any single control over this market. But that wouldn’t be possible, because we know there are lots of people who wouldn’t want to leave all these centralized exchanges, and they would continue making use of them which would be the access that the government would have into this community.

[Mahanton]

States will always strive to control cryptocurrencies as much as possible. Therefore, it will be a long-term confrontation between the people and the government. Of course, if funds in cryptocurrency are transferred through the exchange, then the states have the opportunity to control this process. However, they cannot control transactions between citizens. Yes, states justify such control by the need to combat money laundering and the financing of terrorism. However, an Interpol report in January showed that criminals use cryptocurrencies very little in committing crimes and that cash traditionally holds the primacy here.

They should realized that stuff that even cryptocurrency market is already progressing but still criminals do much still prefer on making use of fiat.It is just crypto do really took the blame which it had

been accused that criminality rate had risen up because of its existence which isn't still proven out but its safe to presume that because of decentralization plus having that anonymity then I couldn't really

blame on why people do really have that kind of impression.Government would be having always on the hunt on whatever possible transactions that they could trace on.

the media is one culprit why they have negative outlook towards crypto. they should dig deeper if they want true information on what's going on with this technology. because it is true, that up until now, fiat is still the leading currency when it comes to money laundering and other illegal activities.
if they will not change their outlook on this matter, they will be left behind by other countries when it comes to crypto-related businesses.

There are already countries that do accept bitcoin/crypto and there are some who had already banned it but most of them are still in neutral phase or simply on observation mode which neither they would be accepting it
or not and they would be waiting for a particular time for them to get in thats why its really hard to make out some conclusion on where this market would be going.They wouldnt really be minding if they would get behind
on the industry as long they would not really able to step out government regulations.They would really be keen on dealing on something which is totally opposing centralization.