The European Union is adopting a heavy-handed approach that might change the way cryptocurrencies work and severely limit the independence and privacy of those who use digital assets such as Bitcoin.
What Happened: The European Commission has published a proposal that would force cryptocurrency service providers, such as cryptocurrency exchanges, to collect personal information whenever their customers transfer cryptocurrency to an external wallet.
Customers would be required to disclose originator and beneficiary information if this law were to be adopted anytime the exchange processes a transaction originating from or directed to an unhosted wallet, such as a mobile wallet, a hardware wallet, or a web 3.0 wallet like Metamask.
Furthermore, the digital asset service provider would be required to determine whether the transaction in question should be refused, halted, or reported to competent authorities on a "risk-sensitive basis."
In a Sunday Twitter Inc. thread, Coinbase Gobal Inc's chief policy officer Faryar Shirzad stated that the legislation "may drastically violate individual financial freedom, irrevocably hurt the cryptoeconomy, [and] hinder the future of innovation across the EU."
According to Simon Lelieveldt, a former policy analyst at the Dutch central bank who now specializes on crypto laws, "if you want to undermine privacy, this is the easiest way to do it." "There's no way this will hold up over time," he concluded, "but a lot of damage can still be done in 15 years."
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