Crypto industry fires back after EU vote to block ‘unhosted’ wallets

“Imagine if the EU required your bank to report you to the authorities every time you paid your rent merely because the transaction was over 1,000 euros,” said Coinbase CEO Brian Armstrong.

The crypto industry has reacted strongly against a EU Parliament committee voting in favor of a regulatory package for tighter know-your-customer (KYC) and anti-money laundering (AML) rules for ”unhosted” private wallets.

The new guidelines would require crypto service providers — most commonly exchanges — to verify the identity of every individual behind an unhosted wallet that interacts with them, while any transaction greater than 1,000 Euros ($1,100) would need to be reported to authorities.

Coinbase CEO Brian Armstrong vented his frustrations against the move via Twitter, as he drew comparisons with fiat to highlight the absurdity of reporting and verifying a 1,000 Euro transaction:

Imagine if the EU required your bank to report you to the authorities every time you paid your rent merely because the transaction was over 1,000 euros. Or if you sent money to your cousin to help with groceries, the EU required your bank to collect and verify private information about your cousin before allowing you to send the funds.

“How could the bank even comply? The banks would push back. That’s what we are doing now,” he added

The proposal was part of an amendment to the Transfer of Funds Regulation that was voted through by the Economic and Monetary Affairs (ECON) and Committee on Civil Liberties, Justice and Home Affairs (LIBE) on March 31.

For the new rules to be enacted, they must be passed via trialogue negotiations between the EU Parliament, European Council and the European Commission, and if they remain unopposed, it would give the crypto industry nine to 18 months to come in full compliance with the legislation.

The chairman and CEO Pascal Gaunthier of digital wallet firm Ledger didn’t mince his words either, stating that the “EU Parliament chose fear over freedom”: