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Since the majority of committees in the European Parliament approved new anti-money laundering laws, fear and anxiety surrounding anonymous cryptocurrency wallets has spread like a thick fog from within the forest.
The problem with fog is that it expands quickly and obscures our vision, even making things appear that aren’t there and vice versa.
This is what happened with the anonymous wallets, the fog phenomenon (as I like to call it).
As Patrick Hansen, Director of EU Strategy at Circle, explained in X,, The new laws do not directly ban self-custody wallets or peer-to-peer (P2P) cryptocurrency payments.
So, What is real and what is not real? Because following controversial titles like “Finbold”Anonymous cryptocurrency wallets are now illegal in the EU“Or the one in the popular outlet Crypto Insiders”Your cryptocurrency wallet is now illegal“We don’t know what to think anymore.”
Table of contents
The Truth About Anonymous or Non-Custodial Wallets in 2024
No one (except for Feinbold and a few other media outlets lost in the fog) has said that anonymous wallets are illegal; in fact, They are not.
So what is said?
The truth about anonymous wallets is that EU regulation, especially Anti-Money Laundering Directive (Anti-Money Laundering Regulations), It does not directly ban anonymous cryptocurrency wallets, but rather regulates payments made through them.
Material’s legal team has carefully reviewed the regulations and concluded that there is currently no EU regulation that explicitly prohibits the use of self-hosted wallets. There are no plans to ban them in the future. It is impossible to detect a transaction from one self-hosted wallet to another, so banning their use makes no sense, at least with current technology.
Payment from unknown wallets
Cash payments exceeding EUR 3,000 in commercial transactions and EUR 10,000 in business transactions are subject to restrictions.This means that. Above these amounts, Cash payments are prohibited, and transactions must be made through more traceable payment methods. Such as bank transfers or electronic payments.
What about exchanges?
The measures taken under this regulation mean that crypto-asset service providers (CASPs), such as exchanges, Anonymous accounts will not be possible.
In other words, All individuals wishing to trade cryptocurrencies through a regulated service will be required to provide personal identification information in accordance with KYC/AML procedures.
Although the regulation does not directly affect self-custodial wallets, anonymous wallets, or the users who use them, it may impact the ease of conducting anonymous transactions, especially if exchanges and other regulated services restrict transactions to and from anonymous wallets.
Prevention or control?
Although this initiative aims to present itself as a preventive measure against money laundering and other illegal activities, it remains extremely dangerous. This action is considered a violation of individual privacy and financial freedom and represents further control by banks and institutions.
As Patrick Briere (Member of the European Parliament) points out in his article, these measures appear to be part of a “war on cash” and conflict with citizens’ financial freedom, promoting dependence on banks and a lack of privacy.
Cryptocurrencies, Internet Money
As Patrick emphasizes, many organizations and entities rely on anonymous donations, citing examples such as Alexei Navalny and WikiLeaks.
Cryptocurrencies are internet money.
In a world where financial rules are constantly changing and becoming more stringent, Using an anonymous wallet like Material becomes indispensable to protect our privacy and individual autonomy..
Not only that, but these types of products play a crucial role in terms of freedom of expression and dissent, Allowing us to conduct secure transactions without government control.
As Patrick Baer points out in his post, measures to ban anonymous payments in cash and crypto are easy to circumvent, as we can still make anonymous transactions between two non-custodial wallets, meaning two people can exchange cryptocurrencies without intermediaries.
Likewise, Patrick also explains that it is possible to “detect” criminal activities without the need for these regulations, as was the case in the past, since transactions are permanently recorded on the blockchain.
Instructions
What are anonymous or non-custodial wallets?
Anonymous or non-custodial wallets are simply digital wallets that allow you to store and manage cryptocurrencies without having to provide your personal information.
How much can I spend using an anonymous wallet without restrictions?
According to new EU rules, you can spend up to €2,999 anonymously without restrictions.
What anonymous wallets are available?
Among the most popular anonymous wallets are Material, Trezor, Ledger, and Safepal.
Can exchanges offer anonymous accounts?
No, all individuals who wish to trade cryptocurrencies through a regulated service will need to provide personal identification information in accordance with KYC/AML procedures.
