One of the main advantages of cryptocurrencies is the anonymity of transactions. This means that cautious people cannot find out who is transferring virtual funds to whom. The situation may soon change because the European Commission has passed a controversial law on cryptocurrency transfers.
The European Commission does not want the anonymity of cryptocurrencies
Under the new law, cryptocurrency exchanges and even owners of regular wallets must receive, store and transmit information about persons involved in transfers with virtual currencies. The creators claim that the new rules will make it easier to identify and report suspicious transactions and possible “freeze” of digital resources.
Initially, the law was intended for transactions in excess of 1,000 euros, but over time, the rule was canceled (they argued that it was possible to easily circumvent the rules by creating a large number of transfers for small amounts).
In addition, the new law provides for the creation of an EU list of high-risk or non-compliant cryptographic service providers.
A blow to one of the pillars of cryptocurrencies. Bitcoin has plummeted
Currently, the EU countries are negotiating the final version of the law. However, it is no secret that this will limit anonymity and therefore one of the main pillars of cryptocurrencies. It is about reducing crime, which is often funded by virtual currencies. On the other hand, such a law could seriously affect the meaning of the use of virtual funds and hit ordinary citizens.
Experts are already very critical of the new idea. Cryptocurrency exchange Coinbase (which profits from cryptocurrency trading) has warned that the new law introduces a surveillance system that stifles innovation driven by virtual currency technology.
The market also reacted to the new law. Since the passage of the new law, the price of Bitcoin has skyrocketed from $47,000 to $40,000 (so we’re talking about a 15% drop in a dozen or so days!).
What will be the further consequences of the controversial law? Well, time will tell…