EU passes World's first Crypto regulation | Crypto Anonymity is dead

[AlTech]

Summary

 

The EU has passed the World's first Cryptocurrency regulation framework, the "Markets in CryptoAssets" regulation, which requires Crypto Exchanges be licensed in the EU if they wish to operate there and to do AML (Anti Money Laundering) checks including requiring information about the sender and recipient of each transaction.

 

This effectively ends Anonymous Crypto transactions within the EU.

 

The regulation takes effect in 2024.

 

The reasons cited for the regulation were to stop financing of terrorism and war.

 

Although a ban of Proof of Work Cryptocurrencies was initially considered, the regulation was subsequently amended to remove the ban.

 

Quotes

Quote

 The Markets in Cryptoassets (MiCA) regulation, expected to come into force next year, places a number of rules on firms dealing in digital currencies, including that any organization planning to issue, trade or store crypto assets (ie, digital wallets) be licensed to do such business in the 27-nation bloc.

 

Quote

Under the new rules, any organization dealing in cryptocurrency purchase or trading would be required to "collect and make accessible certain information about the sender and beneficiary of the transfers of crypto assets," regardless of the amount. In other words, say goodbye to the so-called anonymity of cryptocurrencies.

 

Quote

"Today's decision is bad news for those who have misused crypto-assets for their illegal activities, to circumvent EU sanctions or to finance terrorism and war," said Swedish Finance Minister Elisabeth Svantesson. "Doing so will no longer be possible in Europe without exposure – it is an important step forward in the fight against money laundering," Svantesson added. That portion of the new rules will take effect in 2026.

 

My thoughts

 On one hand this was to he expected and on other hand there is a reason cash won't die (yet). Anonymity is important to some people.

 

I wonder what this will mean for Monero and other privacy focussed Crytocurrencies.

 

It also means decentralising Crypto will be much more difficult if not impossible going forward; especially if other countries pass similar laws.

 

Sources

 https://www.theregister.com/2023/05/17/eu_passes_cryptocurrency_regs/

[jagdtigger]

As usual this wont mean much, and the EU cant really do anything if exchanges outside the EU just shrug this off and continue business as usual.... (The worst it can do is a DNS block but we all know how little that matters.)

[05032-Mendicant-Bias]

It only means that the crypto frauds will partially move outside of the EU and it will get harder to move euros and dollars into crypto exchanges.

 

And by the time the regulation comes in full effect, chances are crypto will have already self immolated as all crooks are either in jail or running from the cops, and the regulation will really only cover CBDC (Central Bnk Digital Currencies).

2 minutes ago, TylerD321 said:

Couldn’t they just trade with non tradable crypto and then trade that into the usable in euro currency? Then it’s not traceable until they want to spend it and they can make up a reason of why they had it?

Obfuscating the flow of founds to skirt regulations? That's called Money laundering, which is exactly what AML regulations are supposed to mitigate.
Now, AML are not really that successfull, but it's still better than nothing. Crypto has shown what happens is you take out all the rails from a financial circuit: The real money all disappear, and it takes years to notice that it has disappeared.

[TylerD321]

Couldn’t they just trade with non tradable crypto and then trade that into the usable in euro currency? Then it’s not traceable until they want to spend it and they can make up a reason of why they had it?

[porina]

When using existing services like Coinbase and Bitpay, you already have to provide ID before they deal with you. I think both are HQ in USA or have presence there. Do they already have similar regulations, or maybe they considered it covered by existing regulations regardless of the crypto aspect?

[AlTech]

5 minutes ago, porina said:

When using existing services like Coinbase and Bitpay, you already have to provide ID before they deal with you. I think both are HQ in USA or have presence there. Do they already have similar regulations, or maybe they considered it covered by existing regulations regardless of the crypto aspect?

They don't have existing regulations in the US. I think they were doing it to protect themselves.

[PDifolco]

1 hour ago, AluminiumTech said:

Summary

 

The EU has passed the World's first Cryptocurrency regulation framework, the "Markets in CryptoAssets" regulation, which requires Crypto Exchanges be licensed in the EU if they wish to operate there and to do AML (Anti Money Laundering) checks including requiring information about the sender and recipient of each transaction.

 

This effectively ends Anonymous Crypto transactions within the EU.

 

The regulation takes effect in 2024.

 

The reasons cited for the regulation were to stop financing of terrorism and war.

 

Although a ban of Proof of Work Cryptocurrencies was initially considered, the regulation was subsequently amended to remove the ban.

 

Quotes

 

 

 

My thoughts

 On one hand this was to he expected and on other hand there is a reason cash won't die (yet). Anonymity is important to some people.

 

I wonder what this will mean for Monero and other privacy focussed Crytocurrencies.

 

It also means decentralising Crypto will be much more difficult if not impossible going forward; especially if other countries pass similar laws.

 

Sources

 https://www.theregister.com/2023/05/17/eu_passes_cryptocurrency_regs/

Only domain where EU is innovative is on regulations.. "We don't understand this, let's regulate it" !

All crypto operators will leave the EU, that will never profit from it, what a bunch of idiotic bureaucrats

[05032-Mendicant-Bias]

20 minutes ago, PDifolco said:

Only domain where EU is innovative is on regulations.. "We don't understand this, let's regulate it" !

All crypto operators will leave the EU, that will never profit from it, what a bunch of idiotic bureaucrats

Profit from what?

Crypto is a significant drain on a government resources both for the power grid usage for Bitcoin mining, prosecution efforts and bankrupcy procedures.
And the whole point of crypto is to not pay taxes by hiding flows of funds, so no inflows from crypto to the government coffers.

[PDifolco]

5 minutes ago, 05032-Mendicant-Bias said:

Profit from what?

Crypto is a significant drain on a government resources both for the power grid usage for Bitcoin mining, prosecution efforts and bankrupcy procedures.
And the whole point of crypto is to not pay taxes by hiding flows of funds, so no inflows from crypto to the government coffers.

Crypto operators pay for the energy they use.. And prosecution and bankruptcy aren't a crypto thing, look at US banks  

What I'm telling is that early regulations kill innovation, and we got that since 30 years in the EU, as a result we fall behind in every domain...

[jagdtigger]

34 minutes ago, PDifolco said:

Only domain where EU is innovative is on regulations.. "We don't understand this, let's regulate it" !

All crypto operators will leave the EU, that will never profit from it, what a bunch of idiotic bureaucrats

You cant profit from nothing so nothing of value have been lost, wont drop a tear for miners freeloaders getting the short end of the stick either....

[CarlBar]

Anyone who think this will onyl affect the Eu isn't thinking straight. Whilst the current legislation might not have an provision for it, (i'm not sure honestly without digging into it), the EU is eventually going to close the obvious loophole of banks still being allowed to do business with exchanges that don't abide by the EU rules. At that point putting money in, or taking it out, of crypto will become all but impossible with exchanges that don't comply.

[porina]

1 hour ago, AluminiumTech said:

They don't have existing regulations in the US. I think they were doing it to protect themselves.

I tried to look at Coinbase as an example. As ever, the answer is "it's complicated". Coinbase from a UK user perspective is actually two parts:

Coinbase Payments Ltd. which is registered and regulated in the UK with FCA as an E-money services provider.

Coinbase Europe Ltd, based in Ireland and is essentially unregulated currently.

 

I'm not an expert in this area, but I think the 1st is the part that is responsible for getting real money in and out of their system, so they do have to operate under existing regulations such as anti-money laundering. The 2nd part is the crypto part which will also become covered as described in OP.

 

Thinking more, once the regulations come into force, the change will be that existing regulated providers will probably only be able to deal with other regulated providers in order to meet those requirements. So crypto could get split between regulated and unregulated pools. You may not as easily move crypto to/from a wallet that is not held by a regulated provider.

[jagdtigger]

13 minutes ago, CarlBar said:

At that point putting money in, or taking it out, of crypto will become all but impossible with exchanges that don't comply.

Because there are no banks outside the EU that could be used as a proxy......

Also i have a hunch that sooner or later tax agencies will give a very hard time for ppl who taken out money through a crypto exchange.

[05032-Mendicant-Bias]

14 minutes ago, PDifolco said:

Crypto operators pay for the energy they use.. And prosecution and bankruptcy aren't a crypto thing, look at US banks  

What I'm telling is that early regulations kill innovation, and we got that since 30 years in the EU, as a result we fall behind in every domain...

Bitcoin miners flee a country as soon as the energy grid collapses, or subsidies ends. So no, miners don't pay for energy, and in texas they get to be paid for energy.

When a company goes bankrupt, there is a legal proceding to split whatever is left to the creditors... It has been going on for well over a decade, it's not an hypotetical...

"Early Regulation"... Bitcoin has been out for fifteen years. It revolutionized the only industry it will ever revolutionize. The industry of frauds. It's mind boggling just how fraudolent crypto is. Just to give you an idea, crypto made for 25% of all reported frauds despite making less than 0.1% of the volume of transactions.

9 minutes ago, porina said:

I'm not an expert in this area, but I think the 1st is the part that is responsible for getting real money in and out of their system, so they do have to operate under existing regulations such as anti-money laundering. The 2nd part is the crypto part which will also become covered as described in OP.

Yes, the way exchanges work is they set a shell company (FTX US, Binance US, etc...) where there is real money to onramp, and that entity just funnels real money in the actual exchange based on a tax heaven. FTX was in the Bahamas, Tether is in the British Virgin Island, nobody knows where Binance parent company is.

 

7 minutes ago, jagdtigger said:

Also i have a hunch that sooner or later tax agencies will give a very hard time for ppl who taken out money through a crypto exchange.

You can slow the tax man down, but you can't stop it

[CarlBar]

32 minutes ago, jagdtigger said:

Because there are no banks outside the EU that could be used as a proxy......

Also i have a hunch that sooner or later tax agencies will give a very hard time for ppl who taken out money through a crypto exchange.

 

There are banks outside the EU, but all the big ones do business in the EU. It won't necessarily stop the serious criminals, but the average joe basically won't be able to go through a crypto exchange that doesn't comply even if they themselves are outside the EU as most likely their bank has a business of some kind somwhere in the EU and they thus have to only do business with compliant exchanges.

[Quackers101]

the EU already wants CBDC... so I dont see how these rules should apply? feels kind of meh and to get more laws around crypto?

[jagdtigger]

1 hour ago, CarlBar said:

but the average joe basically won't be able to go through a crypto exchange that doesn't comply

EU is pretty big, will generate enough demand that specialized banks and exchanges will pop-up left and right... (We seen this many times. If ppl or even a state cant get something because of restrictions, the market will simply create proxy businesses with the singular purpose to act as a gateway to circumvent said restrictions.)

  

8 minutes ago, Quackers101 said:

 feels kind of meh and to get more laws around crypto?

Killing it outright wouldve been better but then the mislead masses who think crypto is gospel that saves them from the big bad banking system would revolt..... (Not realizing crypto does the same thing as a bank, minus the securities and insurance that comes with a real bank that handles real money.)

[Taf the Ghost]

At least they didn't use "for the children" in this one, lol.

 

"Money Laundering" is only a crime because it's designed to enforce a racket of Bank control on money flows (remember, they make money on fees via movement of funds) and for taxes to be somewhat more easily enforced. It's basically the result of Income-based Tax Schemes. Which is why the actual target is always the normal, law abiding citizen, since they know AML laws don't actually prevent the movement of stolen or ill-gotten wealth.

 

That said, this was obviously going to happen in most places. Not because there isn't a need for clarity in their legal operation in societies. No, because there were not enough taxes collected during the big Crypto boom. It's dumb, but that's the only reason they care.

[Beskamir]

I'm curious how they intend to actually police Monero usage. Seems like that'll be as successful as policing software piracy. The only part they could realistically get in the way off would be exchanging Monero to fiat or vice versa and you can in theory bypass exchange blocking by just resorting to in person exchanges or using gift cards like scammers often do. The only people that this will affect are normal/honest people. Criminals that don't give a shit about breaking the law won't even be majorly inconvenienced.

[Kisai]

5 hours ago, 05032-Mendicant-Bias said:

"Early Regulation"... Bitcoin has been out for fifteen years. It revolutionized the only industry it will ever revolutionize. The industry of frauds. 

There are legitimate use cases for "a cryptocoin" but bitcoin ain't that, and neither is ethereum or any other bitcoin that people created farms to generate the coins for. Those will never have any value, and "investing" in them is extremely foolish.

 

Where cryptocoins have potential still, is as a private currency (eg think those time cards for games) because it side-steps over-reach by countries and VISA/AMEX's merchant rules regarding high risk transactions. If you want to buy porn or weed, and your specific state has some assbackwards rules regarding those things, then you end up buying it with the cryptocoin and immediately cashing it out.

 

USD->Cryptocoin->USD

Like, you'd do it in the same transaction.

 

Hence the purpose of the "Tumbler" type function is to anonymize these small-value transactions, so people aren't being arrested for buying weed in a state where it's legal to use, but purchase is difficult due to card networks not permitting it.

 

If anything because of the "high risk" nature of these transactions, where the risk comes from chargebacks, crypto is actually perfect for it. But because the cryptobro's had to basically destroy any legitimacy it could have in the West, we're back to square one and it's most likely going to be something run out of Asia that ends up legitimizing some crypto coin, because the regulatory approach over there gives much less of a care about what you buy.

 

Crypto's primary use as a fraud vehicle is no different from gift cards being used as such. If you make it easy to purchase anonymously it will be used for fraud, no question about it. We should be advocating for the removal of all gift cards from retail stores for the same reason. 

[CarlBar]

7 hours ago, jagdtigger said:

EU is pretty big, will generate enough demand that specialized banks and exchanges will pop-up left and right... (We seen this many times. If ppl or even a state cant get something because of restrictions, the market will simply create proxy businesses with the singular purpose to act as a gateway to circumvent said restrictions.)

  

Killing it outright wouldve been better but then the mislead masses who think crypto is gospel that saves them from the big bad banking system would revolt..... (Not realizing crypto does the same thing as a bank, minus the securities and insurance that comes with a real bank that handles real money.)

 

Within Europe that doesn;t matter, if you can't do business in Europe then you can't do business in Europe. Doesn;t matter what the demand is there.

 

Outside of Europe that might apply, but that would rely on both their being a big enough number of crypto transactors who actually care enough to setup the necessary secondary bank account, and sufficient cash flows being present in those people to drive the demand. Crypto's big, but by global financial standards it's a drop in the bucket.

 

And if any of these specialist banks get too deep in with terrorism or organised crime as major customers they'll be shut down and their management arrested for financial crimes, or if they're somwhere they can't be reached, blacklisted from the global financial system, which again takes them out the range of "can be used by the average joe".

 

 

4 hours ago, Beskamir said:

I'm curious how they intend to actually police Monero usage. Seems like that'll be as successful as policing software piracy. The only part they could realistically get in the way off would be exchanging Monero to fiat or vice versa and you can in theory bypass exchange blocking by just resorting to in person exchanges or using gift cards like scammers often do. The only people that this will affect are normal/honest people. Criminals that don't give a shit about breaking the law won't even be majorly inconvenienced.

 

Thats basically what i was getting at, the current law may or may not include provisions for it, but the Eu can and almost certainly will add provisions to achieve that goal if it becomes an actual issue.

 

3 hours ago, Kisai said:

There are legitimate use cases for "a cryptocoin" but bitcoin ain't that, and neither is ethereum or any other bitcoin that people created farms to generate the coins for. Those will never have any value, and "investing" in them is extremely foolish.

 

Where cryptocoins have potential still, is as a private currency (eg think those time cards for games) because it side-steps over-reach by countries and VISA/AMEX's merchant rules regarding high risk transactions. If you want to buy porn or weed, and your specific state has some assbackwards rules regarding those things, then you end up buying it with the cryptocoin and immediately cashing it out.

 

USD->Cryptocoin->USD

Like, you'd do it in the same transaction.

 

Hence the purpose of the "Tumbler" type function is to anonymize these small-value transactions, so people aren't being arrested for buying weed in a state where it's legal to use, but purchase is difficult due to card networks not permitting it.

 

If anything because of the "high risk" nature of these transactions, where the risk comes from chargebacks, crypto is actually perfect for it. But because the cryptobro's had to basically destroy any legitimacy it could have in the West, we're back to square one and it's most likely going to be something run out of Asia that ends up legitimizing some crypto coin, because the regulatory approach over there gives much less of a care about what you buy.

 

Crypto's primary use as a fraud vehicle is no different from gift cards being used as such. If you make it easy to purchase anonymously it will be used for fraud, no question about it. We should be advocating for the removal of all gift cards from retail stores for the same reason. 

 

Anyone who thought crypto was going to stay anonymous, (or dodge any of countless other regulation on normal money handling forever), was an idiot. Those regulations exist because the thing they forbid, control, restrict, e.t.c. was abused in some negetive way before they where regulated and the regulation was brought in to prevent that. Those same forces would allways lead to crypto getting hit with similar restrictions, being independent of any single country or other entity doesn't let you avoid regulation.

 

All it has ever offered is the possibility of a currency that isn't tied to a single nation state.

[Kisai]

13 hours ago, CarlBar said:

 

Anyone who thought crypto was going to stay anonymous, (or dodge any of countless other regulation on normal money handling forever), was an idiot. Those regulations exist because the thing they forbid, control, restrict, e.t.c. was abused in some negetive way before they where regulated and the regulation was brought in to prevent that. Those same forces would allways lead to crypto getting hit with similar restrictions, being independent of any single country or other entity doesn't let you avoid regulation.

 

All it has ever offered is the possibility of a currency that isn't tied to a single nation state.

No kidding. If two people want to buy weed, porn, sex, etc. Who CARES. All those small, one-off transactions are already not anonymous when done by legal means, when VISA and AMEX aren't trying to control your content. But because crypto coins have no authority to police anything you can use it for anything. It's just a question of how much of an idiot the person is to use it for something that is actually illegal. Despite what people may think, the majority of small drug, porn, sex, etc, transactions are legal, and they wouldn't be taxed if they weren't. VISA and AMEX just don't want the risk of a chargeback and that's the entire reason why they do disgusting censorship policies that Paypal then decides to use as a cudgel to shutdown artists that aren't even drawing porn.

 

There is an entire "underground" paypal/patreon/stripe/etc adult market that is basically "don't say it's porn, because Paypal will shut it down and Stripe has to pretend porn doesn't exist otherwise they will get shutdown by VISA"

 

Just move it into the light and let people buy things they want. I'm not saying any specific crypto currency is good, but if VISA continues down this road, ALL digital purchases are in trouble.

 

 

 

[jagdtigger]

14 hours ago, CarlBar said:

Within Europe that doesn;t matter, if you can't do business in Europe then you can't do business in Europe. Doesn;t matter what the demand is there.

Nice dreamworld you live in there.....

[Sauron]

Most crypto transactions weren't actually anonymous to begin with (what with all the middle men feasting on your metadata...) and you know what, I think it's good when money laundering isn't allowed to happen. There's this cryptobro fantasy about cryptocurrencies being free and untied to government entities but in reality most of them are backed directly by US dollars... because otherwise nobody would buy or use them. So long as that remains the case and the crypto ecosystem sits like a leech on top of the normal economy it should also be subject to the same laws and regulations.

[TetraSky]

On 5/20/2023 at 12:40 PM, AluminiumTech said:

Although a ban of Proof of Work Cryptocurrencies was initially considered, the regulation was subsequently amended to remove the ban.

Sad. Would've helped curb the wastefulness that is cryptomining. Be it from the specialized hardware that's entirely useless outside of mining and is pretty much doomed for the landfill once it's obsolete, to the power it consumes.