Goodbye, privacy, goodbye, it was nice while it lasted.

[stompix]

After investigating, I see that he is quoting a previous draft that was not approved.

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020PC0593

The draft he cites is this one, which is not the one that was voted on last Thursday, nor the one I am referring to or referred to in the articles cited in the OP.

There are two different drafts, mentioning the same thing, one superseding the other
This is the one from 2019 the MICA regulation, the same paragraph that o_e_l_e_o posted
52020PC0595,

Article 3
Definitions

‘crypto-asset service’ means any of the services and activities listed below relating to any crypto-asset:
(a)the custody and administration of crypto-assets on behalf of third parties;
(b)the operation of a trading platform for crypto-assets;
(c)the exchange of crypto-assets for fiat currency that is legal tender;
(d)the exchange of crypto-assets for other crypto-assets;
(e)the execution of orders for crypto-assets on behalf of third parties;
(f)placing of crypto-assets;
(g)the reception and transmission of orders for crypto-assets on behalf of third parties
(h)providing advice on crypto-assets;

This is the new one that simply further introduces MICA definitions to ICT directives
https://eur-lex.europa.eu/legal-content/EN/HIS/?uri=CELEX:52020PC0595&qid=1648917382127

Doesn't matter much.

I wonder where did he got this text from, it's not even in the draft report, because there is one big difference when it comes to a report, he mentioned:

Crypto-asset service      Type of crypto-asset services                         Minimum capital requirements
providers
Class 1                         –reception and transmission of orders            EUR50k
                                     on behalf of third parties; and/or
                                   –providing advice on crypto-assets; and/or
                                   –execution of orders on behalf of third
                                     parties; and/or
                                   –placing of crypto-assets.

Class 2                         Crypto-asset service provider authorised        EUR125k
                                   for any crypto-asset services under class 1
                                   and:
                                   –custody and administration of crypto-assets
                                     on behalf of third parties

Class 3                        Crypto-asset service provider authorised for   EUR150k
                                  any crypto-asset services under class 2 and:
                                  –exchange of crypto-assets for fiat currency
                                    that is legal tender;
                                  –exchange of crypto-assets for other
                                    crypto-assets;
                                  –operation of a trading platform for crypto-assets.

But of course, he will find a way to weasel out of this, I wonder how pathetic it will be.

If a merchant is directly accepting bitcoin in exchange for goods or services, then they are simply a merchant who accepts bitcoin, and are not a "crypto-asset service provider". If a merchant, however, uses a payment processor to accept bitcoin in exchange for goods or services, then the payment processor is a "crypto-asset service provider", providing services on behalf of the merchant, and are therefore obligated to collect KYC and information about the coins you are spending.

That's my understanding, at least, but not being from the EU I am hardly an expert on EU law, and if EU politicians are anything like US politicians, they will openly twist and interpret the wording to mean whatever they want it to mean.

True about merchants accepting bitcoin directly, but there is still hope this will not be implemented even for third-party services.
You see, the "crypto-asset service provider" doesn't provide per current definitions those services to the customer, so at least till the current date as we speak, the customer is the merchant, all regulations apply to him, not to the shopper.
"on behalf the third party", this third party is Walmart or whatever Casino.

As long as MICA won't clearly specify through definitions and stick to the originator this definition is currently covered only in electronic money transfers and does not relate to any purchasing of services.

For your previous post about no exemptions:
https://www.europarl.europa.eu/doceo/document/A-9-2022-0081_EN.html

In order to reflect the special characteristics of national payment systems, and provided that it is always possible to trace the transfer of funds back to the payer , Member States should be able to exempt from the scope of this Regulation certain domestic low-value transfers of funds, including electronic giro payments, used for the purchase of goods or services.

5. A Member State may decide not to apply this Regulation to transfers of funds within its territory to a payee's payment account  permitting payment exclusively for the provision of goods or services where all of the following conditions are met:
 (c) the amount of the transfer of funds does not exceed EUR 1000

[1714686947]

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[franky1]

stompix.. the wording is clear.. it doesnt mention "customer"
so its not a "the customer is the merchant"

it says things like this (in the amendments document)

The crypto-asset service provider or other obliged entity of the originator shall ensure that transfers of crypto-assets are accompanied by the following information on the beneficiary

so the payment service treats the merchant as the "beneficiary' (receiver of funds and holder of the wallet)
and the customer(person buying a product from a merchant) is the originator (sender of the funds)

[stompix]

stompix.. the wording is clear.. it doesnt mention "customer"
so its not a "the customer is the merchant"

so the payment service treats the merchant as the "beneficiary' (receiver of funds and holder of the wallet)
and the customer(person buying a product from a merchant) is the originator (sender of the funds)

There are no customers because we're not talking about purchasing goods.
The whole thing is for financial transfers only, where the originator is the sender and the beneficiary the receiver, in financial sanctions there is no other entity other than the service provider.

DIRECTIVE 2011/83 is clear on this, there is nothing debatable here:
   

‘consumer’ means any natural person who, in contracts covered by this Directive, is acting for purposes which are outside his trade, business, craft or profession;
‘goods’ means any tangible movable items, with the exception of items sold by way of execution or otherwise by authority of law; water, gas and electricity shall be considered as goods within the meaning of this Directive where they are put up for sale in a limited volume or a set quantity
‘financial service’ means any service of a banking, credit, insurance, personal pension, investment or payment nature;

This is a unilaterally implemented directive, you can't go over this definition without first repelling this, and good luck trying to touch the Consumer Rights Directive, it's political suicide.

[KevinMiles]

What is DRAFT saying about when someone is using multiple exchange addresses for mining, which is common practice. The miner will have to provide the ID copy of the mining pools owners from which addresses the coins are received, or what These regulations are total madness!

[BIT-BENDER]

This is sad for Europeans resident, it fast becoming some sort of war between government and crypto-currency (anonymity, security, freedom and privacy). This would definitely be a blow to every Crypto enthusiast out staying in Europe, and this is even an infringement on an individual right, I think we have that right of privacy and if I want to send payment anonymously it should not be restricted, well that goes for Exchange.
Correct me if I am wrong P2P would still work even if the ban is in place, like in my country where there is a ban on crypto-currency transaction, and P2P has been a route for many.

[franky1]

What is DRAFT saying about when someone is using multiple exchange addresses for mining, which is common practice. The miner will have to provide the ID copy of the mining pools owners from which addresses the coins are received, or what These regulations are total madness!

when you sign up to any exchange you are only allowed 1 account.(usually)
with this account you will need to be KYC'd
with this account they may provide you with 'use-once' deposit addresses and you can send funds from multiple addresses to the address currently reserved as your current deposit address

so if you have lots of coins from lots of mined blocks/sources. it does not matter because when you 'spend them' to deposit(request pool(s) to send them to deposit address) to an exchange the exchange will receive them and deem them as YOUR value

EG
mining pool A bc1qbladeblah \
mining pool B bc1qdeedeebla -  miners personal wallet -> exchange deposit address
mining pool C bc1qladeedade /

mining pool A bc1qbladeblah \
mining pool B bc1qdeedeebla --> exchange deposit address
mining pool C bc1qladeedade /

in both cases YOU as the exchange account holder are KYC linked to that account. meaning deposits into that deposit address are deemed as value assigned to you.. as you are the person thats deemed the owner of the funds

..
its the same as if you were arbitraging

exchange A<->exchange B

because you as the exchange account holder, of accounts in both exchange A and B
although the transaction appears to be a straight swap from A to B. they both deem YOU as the instigator/owner/controller of funds because you are the one making the service request for withdrawal /deposit

[KevinMiles]

What is DRAFT saying about when someone is using multiple exchange addresses for mining, which is common practice. The miner will have to provide the ID copy of the mining pools owners from which addresses the coins are received, or what These regulations are total madness!

when you sign up to any exchange you are only allowed 1 account.(usually)
with this account you will need to be KYC'd
with this account they may provide you with 'use-once' deposit addresses and you can send funds from multiple addresses to the address currently reserved as your current deposit address

so if you have lots of coins from lots of mined blocks/sources. it does not matter because when you 'spend them' to deposit(request pool(s) to send them to deposit address) to an exchange the exchange will receive them and deem them as YOUR value

EG
mining pool A bc1qbladeblah \
mining pool B bc1qdeedeebla -  miners personal wallet -> exchange deposit address
mining pool C bc1qladeedade /

mining pool A bc1qbladeblah \
mining pool B bc1qdeedeebla --> exchange deposit address
mining pool C bc1qladeedade /

in both cases YOU as the exchange account holder are KYC linked to that account. meaning deposits into that deposit address are deemed as value assigned to you.. as you are the person thats deemed the owner of the funds

..
its the same as if you were arbitraging

exchange A<->exchange B

because you as the exchange account holder, of accounts in both exchange A and B
although the transaction appears to be a straight swap from A to B. they both deem YOU as the instigator/owner/controller of funds because you are the one making the service request for withdrawal /deposit

Thanks for clearing that out.

And what happens when someone sends coins from his own unhosted wallet to his KYC`d exchange account in order to exchange it to fiat? Has to prove that his won wallet is his own, or what?

Brian Armstrong - Coinbase CEO said that "Moreover, any time you receive 1,000 euros or more in crypto from a self-hosted wallet, Coinbase will be required to report you to the authorities. This applies even if there is no indication of suspicious activity."

[TheGreatPython]

If that goes through and gets implemented, it's pretty much the end of crypto and many fundamentals it's based on such as 'not-my-keys-not-my-coins'

No, it's not.

The foundations of cryptocurrency, as an idea, are very strong. It is well known that peer-to-peer, decentralized networks are unstoppable. Of course and they can be regulated, but there's a limit. If you deposit your coins to big, centralized exchanges you fall back on the central point of failure. Don't. Use a DEX. You'll always be able to move them across pockets without anyone's permission.

I know no fundamentals that include the transition from crypto to fiat currency. This is what's going to get harder to do.

This is true, plus that's just Europe and not the whole world. As someone who doesn't live in Europe, I do not care about what their laws about crypto is at all. To say that "crypto as we know it would be gone" requires the whole world to jump in on this, not just Europe. There are like 5 billion people give or take that doesn't really get impacted about this at all, nobody cares about this in that part of the world.

Only the European continent and the places that gets impacted by this would care about it. Which means that at the very very worst case (and not even that) it would only cause a "crypto as we know it would be gone in EUROPE" and that's it, nothing more than that.

[henmark]

Uhm, why are you acting like you are surprised about this? This news is not new any longer, it has been said over and over again in this forum and also on social media like Twitter. Most people are already aware that this situation is going on. Even Brian Armstrong warned the cryptocurrency community that if they don’t want to face the tough level of regulation that is coming this time around, which is going to kill off the privacy of Bitcoin, then they should all switch to decentralized or non custodial wallets.

As long as you continue to make use of centralized exchanges and wallets, then you are ready for this. If everyone are going to switch to making use of decentralized platforms, or peer to peer, then it would be very difficult for the government to achieve this, they would be left with no power.

[laurenB7742]

If that goes through and gets implemented, it's pretty much the end of crypto and many fundamentals it's based on such as 'not-my-keys-not-my-coins'

No, it's not.
The foundations of cryptocurrency, as an idea, are very strong. It is well known that peer-to-peer, decentralized networks are unstoppable. Of course and they can be regulated, but there's a limit. If you deposit your coins to big, centralized exchanges you fall back on the central point of failure. Don't. Use a DEX. You'll always be able to move them across pockets without anyone's permission.
I know no fundamentals that include the transition from crypto to fiat currency. This is what's going to get harder to do.

This is true, plus that's just Europe and not the whole world. As someone who doesn't live in Europe, I do not care about what their laws about crypto is at all. To say that "crypto as we know it would be gone" requires the whole world to jump in on this, not just Europe. There are like 5 billion people give or take that doesn't really get impacted about this at all, nobody cares about this in that part of the world.
Only the European continent and the places that gets impacted by this would care about it. Which means that at the very very worst case (and not even that) it would only cause a "crypto as we know it would be gone in EUROPE" and that's it, nothing more than that.

exactly, who cares EU Parlament!!
I don't have time to bother about them.
If they made changes then surely only they and their people will suffer for their shitty decisions.
The whole world will follow the basic crypto rules "not your key not your coins"
I think people are becoming very jealous of Bitcoin. They have no idea what decision they are making! This is not a good thing at all.

[franky1]

And what happens when someone sends coins from his own unhosted wallet to his KYC`d exchange account in order to exchange it to fiat? Has to prove that his won wallet is his own, or what?

Brian Armstrong - Coinbase CEO said that "Moreover, any time you receive 1,000 euros or more in crypto from a self-hosted wallet, Coinbase will be required to report you to the authorities. This applies even if there is no indication of suspicious activity."

1. no you dont. you wanting a deposit into the account deposit address is you having those assigned to you. they do not need you to prove every deposit is yours... you wanting/have a deposit put into your account deposit address is you already linking yourself to that deposit.
in short nothing else is needed if your already KYC'd by the exchange

EG

For transfers of funds or for transfers of crypto-assets where verification is deemed to have taken place,
payment service providers and crypto-asset service providers should not be required to verify information on the payer or the payee accompanying each transfer of funds, or on the originator and the beneficiary accompanying each transfer of crypto-assets, provided that the obligations laid down in Directive (EU) 2015/849 are met.

2. they have to keep logs of all deposits and trades/swaps within their service and if the authorities request it then they have to provide that info to the authorities.
or if the service deems it to reach a certain level of suspicion, then the service decides to report it.

basically if the authorities request the info, give it. or the service only gives info that they find highly suspicious that is worthy of reporting. it does not mean everything gets reported

EG

As regards transfers of crypto-assets, the crypto-asset service provider of the beneficiary should implement effective procedures to detect whether the information on the originator or the beneficiary is missing or incomplete. These procedures should include, where appropriate, monitoring after or during the transfers, in order to detect whether the required information on the originator or the beneficiary is missing or incomplete. With a view to ensuring the respect of the right to privacy and the protection of
personal data, personal information should not be recorded on the distributed ledger and should not be attached directly to the transfer of crypto-assets itself. It should however be required that the
information is submitted immediately and securely, and made available upon request to appropriate authorities

this one part alone both tells people that the EU are not requesting that blockchains should make users info public on the blockchain (a silly idea certain people propagandised months ago)

ill also quote this that clarifies they do not want the crypto software/ wallet software to send the info

2. Transfers from/to un-hosted wallets
Secondly, it should be clarified that this Regulation applies also to transfers from or to crypto-asset wallets based on a software or hardware not hosted by a third party, known as ‘unhosted wallets’, provided that a crypto-asset service provider or another obliged entity is involved. In such circumstances, however, there should be no transmission of information to the unhosted wallet. Information should be obtained by the crypto-asset service provider directly from its customer and should be held and made available to competent authorities.

and also states the "made available" in many exerts .. ON REQUEST to the authorities.. so its not a "report everything"

if it ever was a report everything. then every single market exchange every deposit every withdrawal would be reported and basically flood the authorities with nonsense stuff..
they only want the interesting reports that are suspected to be linked to crimes. they dont want to be flooded with everything. and thats the reason why they get service providers to have compliance officers and investigators and such. to weed out the boring from the interesting.
if they just wanted everything. they would not need all these trained employees within the service providers business. they would just ask for direct access to their database

there are other things. like

as well as effective procedures to detect suspicious transfers based on the source or destination of the crypto-assets involved, in particular any link with criminal activities and darknet marketplaces, or any usage of mixers or tumblers or other anonymising services, in order to allow them to decide whether to
execute, reject or suspend that transfer and to determine the appropriate follow-up action to take

the 'determine the appropriate follow-up action to take' references things like if the service should raise the flag to a potential need to report it to authorities.
in short its not a defacto 'report everything'

in short. they do not blanket ban users for using a mixer or freeze the account or refuse withdrawals or report them automatically/every instance. the service provider has to assess things case by case. and with other EU directives they should only really refuse withdrawals/access if done via a court order to seize funds.

heres another little nugget to clarify certain peoples false assumptions of how MSB's work
if a user refuses to give info. the service provider cannot defacto just seize the funds and make the customer at a loss just for not providing info.
instead the service has to have procedures to not seize.. but instead suspect certain service features or offerings like access to the market order book. and offer a refund mechanism to return funds to the customer to then close their account..

many unregulated(crap services) actually pretend they have the right to keep funds by asking customers for extraneous things which they know the customer will refuse to provide and pretend that triggers their ability to keep funds(steal funds actually)

Where a crypto-asset service provider or other obliged entity repeatedly fails to provide the required information on the originator or the beneficiary, the crypto-asset service provider of the beneficiary or
other obliged entity shall take steps, which may initially include the issuing of warnings and setting of deadlines, and return the transferred crypto-assets to the originator’s crypto-asset account or wallet
address. The crypto-asset service provider or obliged entity of the beneficiary shall also determine whether to reject any future transfers of crypto-assets from, or restrict or terminate its business
relationship with, that crypto-asset service provider or obliged entity

[bbc.reporter]

The law will affect exchanges and non-custodial wallets, such as metamask, ledger and trezor, as I explained.

So this mean you aren't even allowed to hold your Crypto on a Ledger/Trezor?

No, it means that if you hold your crypto on a Ledger, Trezor or any other non-custodial wallet, you will have to provide information about a receiver when you are sending your crypto. The same will probably be when holding your crypto on an exchange.

But how will they know who owns each address? There is no mention about mandatory KYC procedure for people who holds crypto on a non-custodial wallets. If there won't be a KYC, how will they know who are the owners? And if they don't know who is the sender, how will they punish him for providing false information about a person they are sending crypto.

Damn, can't we just say we are sending money from one wallet of ours to other? They won't know shit TBH.

Agreed hehehe. The problem with this is those people creating the laws do not or have not thought on how to enforce them. This will be a complicated problem and the paperwork for this would be enough for them to give up on many cases. It will be a problem for the users only during the beginning, however, similar to many other laws they cannot be enforced to the fullest extent. There will still be users who will still enjoy their privacy in the cryptospace.

[Poker Player]

After investigating, I see that he is quoting a previous draft that was not approved.

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020PC0593

The draft he cites is this one, which is not the one that was voted on last Thursday, nor the one I am referring to or referred to in the articles cited in the OP.

There are two different drafts, mentioning the same thing, one superseding the other
This is the one from 2019 the MICA regulation, the same paragraph that o_e_l_e_o posted
52020PC0595,

wonder where did he got this text from, it's not even in the draft report, because there is one big difference when it comes to a report, he mentioned:

It doesn't matter much but the text from which he extracted this information is that one, Annex IV – Minimum capital requirements for crypto-asset service providers. Just use ctrl+F and "EUR 50,000" for example.

The fact is that this text, article or whatever we want to call it, was not approved.

Regarding franky1, I have put him back on ignore, and I will not take him out. Nothing personal against you franky1, but I don't feel like arguing with you forever.

[n0nce]

Damn, can't we just say we are sending money from one wallet of ours to other? They won't know shit TBH.

We don't have to tell them anything. At all.
As @pooya87 said, everybody will just switch to the decentralized platforms. We can (and should!) use hardware wallets without their crappy wallet platforms and go on.

The only problem I see is that this will slow down the interconnection between Bitcoin and the financial world.

So it clearly looks bad, but I have high hopes there will be plenty of ways to avoid EU crap when we want to and this may actually make people start using Bitcoin.. more properly.

I strongly agree with NeuroticFish here.

The optimist in me always likes to think that these laws will cause people to get their coins off exchanges, get open-source software and hardware with verifiable builds and start transacting much more amongst each other in a somewhat 'circular, Bitcoin-based economy' kind of way. If needed, P2P exchanges such as Bisq can be used as on-/off-ramps, but even if those were somehow shut down, Bitcoin mining could become more attractive again.

Honestly, what sounds more like 'the Bitcoin satoshi envisioned'?
This (somewhat what is happening often nowadays - 'coin' because I speak of cryptocurrencies in general)

• Coin bought in centralized exchanges
• They are stored on the exchange for easy and quick selling
• Coins used as mere object for speculation
• 'Staked' on exchanges to 'generate profit'
• Nobody mines at home
• Nobody runs a node
• Software clients are closed-source
• Coins are tainted and only 'legal coins' accepted

Or this?

• Coins are acquired by mining at home
• Stored offline in open-source and / or DIY devices
• Coins are used for paying and being paid
• Miner generates profit
• Everyone runs their own full node
• Software and hardware is open-source
• Coins are fungible and everyone accepts all UTXOs

If they really go hard against hardware wallet companies for instance, I would quickly switch to DIY projects such as SeedSigner, Krux and my trusty Washer Backup (I'm so happy with this that I won't buy another seed plate product again, pretty sure about this. )

However, the Wallet Scrutiny 'verifiably built' firmwares should be good and in a world with ever stricter laws, I can see myself just start verifying them personally before each and every firmware update.

They can also force many of non-custodial wallets to stop their service. Most of non-custodial wallets are connected to centralized servers and can shut down at any time.
For example, trustwallet is a non-custodial wallet. But there is no guarantee that it will work the next time you want to make a transaction.

That's wrong. Non-custodial means you are the only one having access to your own seed words. Once you've backed them up and nobody else has access to them, what do you care if the application stops working? Install another one, import the seed and you're golden.
I also strongly believe that open-source is an essential element of basically anything in this space; this will allow you e.g. to fork a manufacturer's source code and compile it yourself, if they have to shut down due to legal pressure. Or if they have to remove functionalities, you could add them back in from the commit history for instance.

[Poker Player]

Honestly, what sounds more like 'the Bitcoin satoshi envisioned'?
This (somewhat what is happening often nowadays - 'coin' because I speak of cryptocurrencies in general)

• Coin bought in centralized exchanges
• They are stored on the exchange for easy and quick selling
• Coins used as mere object for speculation
• 'Staked' on exchanges to 'generate profit'
• Nobody mines at home
• Nobody runs a node
• Software clients are closed-source
• Coins are tainted and only 'legal coins' accepted

Or this?

• Coins are acquired by mining at home
• Stored offline in open-source and / or DIY devices
• Coins are used for paying and being paid
• Miner generates profit
• Everyone runs their own full node
• Software and hardware is open-source
• Coins are fungible and everyone accepts all UTXOs

Obviously, the latter sounds more like what Satoshi said, but in many cases an invention ends up being different in several ways from the original idea of its creator.

Today we have reached the current number of users and the current price among other things because of centralized exchanges, demand from companies and government regulations. How many people would use Bitcoin today if it were banned worldwide? And what would the price be? I think it would have a much smaller number of users and a much lower price.

If Bitcoin were used exclusively P2P, it would be a thing of a few cyberpunks, and events like, for example, legalization as a currency in El Salvador, would not have happened.

[Wind_FURY]

This is worse than many people think.

There will be blacklist of "non-compliant" entities. So moving company outside of EU won't work.
If actors like coinbase,kraken and binance want to keep their SEPA FIAT EUR gateways, they'll have to comply.

This is an attempt to convert cryptocurrency system into Banking like system where every party of the transfer is known.
If that goes through and gets implemented, it's pretty much the end of crypto and many fundamentals it's based on such as 'not-my-keys-not-my-coins'

I'm confident that that is PRECISELY what a world under the CBDC-system will look like. There is a saying that "if you control a nation-state's money, you control the nation". That's where the real power resides. Bitcoin's underlying nature takes away some of that power. The government's response is to make criminals out of you. OK, but I'm also very confident that some users would rather be "criminals" than give back some of the freedom that they have won back through Bitcoin.

[KevinMiles]

So for the already KYC`d accounts there is no practical difference now and then !?

And what happens when someone sends coins from his own unhosted wallet to his KYC`d exchange account in order to exchange it to fiat? Has to prove that his won wallet is his own, or what?

Brian Armstrong - Coinbase CEO said that "Moreover, any time you receive 1,000 euros or more in crypto from a self-hosted wallet, Coinbase will be required to report you to the authorities. This applies even if there is no indication of suspicious activity."

1. no you dont. you wanting a deposit into the account deposit address is you having those assigned to you. they do not need you to prove every deposit is yours... you wanting/have a deposit put into your account deposit address is you already linking yourself to that deposit.
in short nothing else is needed if your already KYC'd by the exchange

EG

For transfers of funds or for transfers of crypto-assets where verification is deemed to have taken place,
payment service providers and crypto-asset service providers should not be required to verify information on the payer or the payee accompanying each transfer of funds, or on the originator and the beneficiary accompanying each transfer of crypto-assets, provided that the obligations laid down in Directive (EU) 2015/849 are met.

2. they have to keep logs of all deposits and trades/swaps within their service and if the authorities request it then they have to provide that info to the authorities.
or if the service deems it to reach a certain level of suspicion, then the service decides to report it.

basically if the authorities request the info, give it. or the service only gives info that they find highly suspicious that is worthy of reporting. it does not mean everything gets reported

EG

As regards transfers of crypto-assets, the crypto-asset service provider of the beneficiary should implement effective procedures to detect whether the information on the originator or the beneficiary is missing or incomplete. These procedures should include, where appropriate, monitoring after or during the transfers, in order to detect whether the required information on the originator or the beneficiary is missing or incomplete. With a view to ensuring the respect of the right to privacy and the protection of
personal data, personal information should not be recorded on the distributed ledger and should not be attached directly to the transfer of crypto-assets itself. It should however be required that the
information is submitted immediately and securely, and made available upon request to appropriate authorities

this one part alone both tells people that the EU are not requesting that blockchains should make users info public on the blockchain (a silly idea certain people propagandised months ago)

ill also quote this that clarifies they do not want the crypto software/ wallet software to send the info

2. Transfers from/to un-hosted wallets
Secondly, it should be clarified that this Regulation applies also to transfers from or to crypto-asset wallets based on a software or hardware not hosted by a third party, known as ‘unhosted wallets’, provided that a crypto-asset service provider or another obliged entity is involved. In such circumstances, however, there should be no transmission of information to the unhosted wallet. Information should be obtained by the crypto-asset service provider directly from its customer and should be held and made available to competent authorities.

and also states the "made available" in many exerts .. ON REQUEST to the authorities.. so its not a "report everything"

if it ever was a report everything. then every single market exchange every deposit every withdrawal would be reported and basically flood the authorities with nonsense stuff..
they only want the interesting reports that are suspected to be linked to crimes. they dont want to be flooded with everything. and thats the reason why they get service providers to have compliance officers and investigators and such. to weed out the boring from the interesting.
if they just wanted everything. they would not need all these trained employees within the service providers business. they would just ask for direct access to their database

there are other things. like

as well as effective procedures to detect suspicious transfers based on the source or destination of the crypto-assets involved, in particular any link with criminal activities and darknet marketplaces, or any usage of mixers or tumblers or other anonymising services, in order to allow them to decide whether to
execute, reject or suspend that transfer and to determine the appropriate follow-up action to take

the 'determine the appropriate follow-up action to take' references things like if the service should raise the flag to a potential need to report it to authorities.
in short its not a defacto 'report everything'

in short. they do not blanket ban users for using a mixer or freeze the account or refuse withdrawals or report them automatically/every instance. the service provider has to assess things case by case. and with other EU directives they should only really refuse withdrawals/access if done via a court order to seize funds.

heres another little nugget to clarify certain peoples false assumptions of how MSB's work
if a user refuses to give info. the service provider cannot defacto just seize the funds and make the customer at a loss just for not providing info.
instead the service has to have procedures to not seize.. but instead suspect certain service features or offerings like access to the market order book. and offer a refund mechanism to return funds to the customer to then close their account..

many unregulated(crap services) actually pretend they have the right to keep funds by asking customers for extraneous things which they know the customer will refuse to provide and pretend that triggers their ability to keep funds(steal funds actually)

Where a crypto-asset service provider or other obliged entity repeatedly fails to provide the required information on the originator or the beneficiary, the crypto-asset service provider of the beneficiary or
other obliged entity shall take steps, which may initially include the issuing of warnings and setting of deadlines, and return the transferred crypto-assets to the originator’s crypto-asset account or wallet
address. The crypto-asset service provider or obliged entity of the beneficiary shall also determine whether to reject any future transfers of crypto-assets from, or restrict or terminate its business
relationship with, that crypto-asset service provider or obliged entity

[amishmanish]

As @pooya87 said, everybody will just switch to the decentralized platforms. We can (and should!) use hardware wallets without their crappy wallet platforms and go on.
--

We could all use some education on how to use the ledger and the trezor without their platforms. The

Even if one starts to use the hardware wallet without their platform, I guess having even once used the platform means that their servers can easily connect that address with the said device delivered to a particular address and customer?

So that renders the whole thing traceable forever I guess. I would be happy to know if someone can give information to the contrary.

I'm also very confident that some users would rather be "criminals" than give back some of the freedom that they have won back through Bitcoin.

These moves aren't exclusively aimed at bitcoin nor have been provoked by them. Most of this has come to pass with the growing volume of trades and transactions that are happening on smart-contract platforms and the millions being moved in NFT sales. When only Bitcoin was being used, most transactions would have been smaller P2P ones. Those on Ethereum and these other platforms with VC money are huge and have been leading to a lot of people getting scammed and losing their money, OR, in a lot of other cases people making a lot of money without having to pay taxes.

I doubt that the nation states cared till it was just people losing money to scammers. Since every kid in the basement is starting to make 1000s of dollars with NFTs and wallet farming, they don't seem to be very comfortable anymore.

[NeuroticFish]

We could all use some education on how to use the ledger and the trezor without their platforms. The

Even if one starts to use the hardware wallet without their platform, I guess having even once used the platform means that their servers can easily connect that address with the said device delivered to a particular address and customer?

So that renders the whole thing traceable forever I guess. I would be happy to know if someone can give information to the contrary.

I use my Ledger with Electrum using my local Electrum server linked to my own Bitcoin Core (yes, it means 425+GB spent for that). I even wrote a tutorial for it.

Of course that if you've used their wallet, your addresses will be traceable, at least the first some (10-20), so best is to reset to new seed.
And of course that (especially in case of Ledger, since it's closed source) one doesn't know 100% sure his addresses are not tracked even if he resets it and never use the wallet part of their HW platform (since the info may be already leaking at firmware updates or installing the bitcoin app into the HW). You can follow my answer here and maybe that whole topic.

[o_e_l_e_o]

This is true, plus that's just Europe and not the whole world. As someone who doesn't live in Europe, I do not care about what their laws about crypto is at all.

exactly, who cares EU Parlament!!
I don't have time to bother about them.

Bad attitude to have. The US are in the process of passing similar laws. Now the EU. When two of the largest crypto markets in the world move in one direction, then most companies will follow so they can continue to operate in these jurisdictions, and many other countries will fall in line with similar legislation. This will absolutely spill over to other countries.

So for the already KYC`d accounts there is no practical difference now and then !?

With this legislation, every transaction you make via a centralized exchange is reported directly to the relevant authorities in your country. So I would expect a lot more cases of people having accounts locked or coins seized pending some nonsense investigation because some sketchy blockchain analysis has decided that you might be a criminal.

Coins are used for paying and being paid

This is the critical step. Storing your own keys, running your own node, using open source software, mixing your coins, etc., are all trivial. Being able to spend your bitcoin without going through the fiat system is that hard part. I don't want to sell my bitcoin for fiat and then spend the fiat, I don't want bitcoin debit cards which sell your bitcoin for fiat at point of sale, I don't want to have to buy gift cards first, I don't want to have to go through some third party processor which swaps my bitcoin for fiat at the point of sale. Although I do some of these things to let me spend my bitcoin, what I really want are merchants which accept bitcoin directly. Give me enough of those, and avoiding the fiat system entirely becomes easy.