The European Union is considering a heavy-handed approach that could change how cryptocurrencies work and greatly limit the freedom and privacy of those who use digital assets, including Bitcoin (CRYPTO: BTC).
What Happened: The European Commission has drafted a proposal that would impose a requirement on cryptocurrency service providers — such as cryptocurrency exchanges — to gather personal information every time their customers transfer crypto to an external wallet.
If this bill were to be implemented, customers would have to provide originator and beneficiary information when the exchange is processing a transaction originating from or directed to an unhosted wallet — such as a mobile wallet, a hardware wallet or a web 3.0 wallet such as Metamask.
Furthermore, the digital asset service provider would also be required to assess on a “risk-sensitive basis” whether the transaction in question should be rejected, suspended and whether it should be reported to relevant authorities.
Coinbase Gobal Inc's (NASDAQ:COIN) chief policy officer Faryar Shirzad commented in a Sunday Twitter Inc. (NYSE:TWTR) thread that the legislation "could significantly violate individual financial freedom, irreparably harm the cryptoeconomy, [and] stifle the future of innovation across the EU."
Simon Lelieveldt, a former policy analyst at the Dutch central bank who now focuses on crypto regulations, told crypto news outlet Decrypt that "if you want to kill privacy, this is the best way to do it." He concluded: "No way this will stand up over time, but in 15 years' time a lot of damage can be done still."
Photo: Courtesy of CryptoWallet.com Images on Flickr
