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Protecting individual privacy and safety: Analysis of EU regulations on payment limits for anonymous crypto wallets

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Recently, the European Parliament's Economics and Civil Liberties committees voted in favor of imposing limits on payments by unverified crypto users as part of a significant overhaul of money laundering laws. This article explores the potential impact of these regulations on individual privacy and safety, particularly regarding anonymous cryptocurrency wallets.


The European Parliament has voted in favor of imposing payment limits on anonymous crypto wallets, as part of a significant revamp of money laundering regulations.

Lawmakers in two of the Parliament’s key committees, the Economics and Civil Liberties committees, approved the proposals, which aim to tackle dirty money scandals within the European Union (EU). The regulations will prohibit businesses from accepting large cash payments, create a new European Union Anti-Money Laundering Agency (AMLA), and restrict payments by unverified crypto users.

The vote received 99 votes in favor, with only eight against and six abstentions. The new regulations will be considered alongside measures that seek to outlaw cryptocurrencies that permit anonymity, such as monero and dash, as well as the implementation of rules ensuring that payers are identified when funds are transferred. This vote will initiate negotiations with the EU Council, representing EU member states, to frame a consistent version of the law.

Privacy coins

Privacy-focused cryptocurrencies, also known as privacy coins, are digital currencies that prioritize anonymity and privacy by implementing various technologies and protocols to conceal the identity of the sender and receiver of funds and the transaction details on the blockchain.

These cryptocurrencies aim to offer a high level of privacy and security to users who value financial confidentiality and do not want their financial transactions to be tracked or monitored by third parties, such as government agencies or financial institutions.

Privacy-focused cryptocurrencies typically use advanced cryptography and privacy-focused features such as stealth addresses, ring signatures, and zero-knowledge proofs to enhance the privacy and anonymity of transactions. This makes it more difficult to trace and link transactions on the blockchain, protecting users from potential fraud, identity theft, and surveillance.

Some of the best known privacy-focused cryptocurrencies are:

  1. Monero (XMR)
  2. Zcash (ZEC)
  3. Dash (DASH)
  4. Verge (XVG)
  5. Grin (GRIN)

Monero is an open-source, decentralized cryptocurrency that is designed to be secure, private and untraceable. It uses the RingCT protocol, which combines multiple transactions to make it difficult to determine the actual sender and receiver of funds. Monero also uses stealth addresses, which are unique one-time addresses that are generated for each transaction, making it nearly impossible to track transactions on the blockchain.

Dash, on the other hand, is a decentralized, open-source cryptocurrency that is designed to be fast and secure. It was originally launched as XCoin in January 2014, but later rebranded as Darkcoin in February 2014, before finally settling on the name Dash in March 2015. Dash uses a unique combination of features, including PrivateSend, which allows users to mix their coins with other users on the network to create a greater degree of anonymity.

Like Monero, Dash also uses a decentralized network of nodes to verify transactions and is secured by a Proof-of-Work consensus algorithm. However, Dash is unique in that it has a governance system that allows stakeholders to vote on decisions related to the network's development and management.

Both Monero and Dash are privacy-focused cryptocurrencies that prioritize anonymity and security. While Monero uses ring signatures and stealth addresses to ensure transaction privacy, Dash uses a unique mixing system called PrivateSend to achieve the same goal.

EU limitations on privacy coins

The Anti-Money Laundering Regulation aims to restrict payments of 1,000 euros or more from self-hosted wallets where it is not possible to identify the payer. French lawmaker Damien Carême, who leads the Parliament’s negotiations on the overhaul, previously clarified that the cap of 1,000 euros would not apply if a regulated wallet provider is involved or the identity of the payer is known.

The proposals come in the wake of several dirty money scandals within the bloc, including the “Pandora Papers” leaks and concerning the processing of Russian funds by Danske Bank. The new regulations seek to tackle these issues and prevent dirty money from flowing into other sectors. Carême commented on the provisions on money laundering in the metaverse, stating that he did not want to see dirty money inhibited by banking controls simply flowing into other sectors.

It is important to note that cryptocurrencies are not inherently illegal or fraudulent, but some actors have used them for illicit purposes such as money laundering, tax evasion, and terrorism financing. As a result, they believe it is crucial to have effective regulations and safeguards in place to prevent such abuses.

The EU’s decision to impose payment limits on anonymous crypto wallets is a step in the fight against money laundering and the misuse of cryptocurrencies. The new regulations seek to address issues that have arisen and ensure that dirty money is not allowed to flow into other sectors. While cryptocurrencies are not inherently illegal, it is essential to have effective regulations and safeguards in place to prevent their misuse.

Individual privacy and safety in danger

The question of privacy and safety being lost by government restrictions and control is a complex and controversial topic. While government restrictions and control may be implemented with the intention of enhancing public safety and preventing criminal activity, they can also infringe on individuals' privacy rights and lead to potential abuses of power.

For example, government surveillance programs that monitor individuals' online activity and communications can erode privacy rights and violate civil liberties. Similarly, government restrictions on the use of privacy-focused technologies such as encryption can make it easier for hackers and other malicious actors to exploit vulnerabilities and compromise sensitive data.

Government control over financial transactions can also have negative consequences for privacy and safety. While measures such as those proposed in the EU to limit payments by unverified crypto users may be intended to combat money laundering and other criminal activities, they could also prevent legitimate users from using privacy-focused cryptocurrencies and may lead to increased government surveillance of financial transactions.

Question of privacy and safety being lost by government restrictions and control is a complex issue that requires careful consideration of the potential benefits and drawbacks of different policies and approaches. It is important for governments to balance the need for public safety and security with the protection of individuals' privacy rights and civil liberties.


🔶Resources in news:

European Parliament approves crypto AML reforms: https://www.financemagnates.com/cryptocurrency/news/european-parliament-approves-crypto-aml-reforms/

The EU’s fight against money laundering: https://ec.europa.eu/info/publications/200928-fight-against-money-laundering_en

How to prevent money laundering in cryptocurrencies: https://www.theblockcrypto.com/linked/109868/how-to-prevent-money-laundering-in-cryptocurrencies

🔶Image attribution:

Cover image is made by Creative Fabrica and Canva


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