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Anonymous crypto wallets proposed to ban in the EU. Why is it important?

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Anonymous crypto wallets

Anonymous crypto wallets proposed to ban in the EU. Why is it important?

On July 20, the European Commission presented a draft law that would prohibit companies from using cryptocurrency addresses without personal identification (anonymous crypto wallets). What impact the new rules will have on the digital currency industry are told by Bitxmi experts.

On July 20, the European Commission proposed a draft amendment to EU legislation, according to which the use of anonymous cryptocurrency wallets will be prohibited, and companies processing cryptocurrency transfers will have to track the personal data of senders and recipients of digital coins, including name, residence address, date of birth and account number. The new rules were developed as part of the fight against money laundering and terrorist financing.

Unrealistic task

First of all, the innovations will affect legal entities: crypto exchanges, exchangers, management companies, and custodian providers, analysts of Bitxmi are confident. According to them, if the owner of the cryptocurrency enters into relations with these organizations, then he will also have to disclose data on the ownership of digital coins in his wallet.

It is necessary to take into account the fact that the vast majority of users use “hot” wallets, and these projects operating in the EU will likely ask the user for more information at the KYC stage to identify the fact of ultimate ownership of assets on the wallet.

Hot wallets are wallets that have a permanent connection to the Internet. Such wallets are used if there is a need to frequently make transactions. Cold wallets store cryptocurrency without an Internet connection, so there is practically no risk of being hacked.

It is physically impossible to prohibit the use of “cold” wallets and “Open Source” applications to manage them, analysts say. If both parties to the transaction use anonymous software, it is not possible to determine whether they are EU citizens.

Impact on the industry

If the law banning anonymous crypto wallets is adopted in the European Union, then crypto companies will be forced to abandon the listing of anonymous coins, Bitxmi experts are sure. According to them, the trading volumes of such coins are already low, so the law will only affect “gray” and “black” companies, of which there are not so many in the EU.

Fully anonymous coins include Monero, Zcash, Dash, and other tokens, which are built in such a way that transactions using them cannot be tracked and tied to a specific user.

The segment of over-the-counter trading may suffer, in a particular case – p2p-platforms and exchange offices, which are distinguished by their simplicity and speed with the relative anonymity of transactions. With the introduction of new rules, it will be necessary to improve the technical part and legal regulations, this will ultimately lead to an increase in the cost of services in the OTC market.

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Disclaimer: Bitxmi News is a news portal and does not provide any financial advice. Bitxmi's role is to inform the cryptocurrency and blockchain community about what's going on in this space. Please do your own due diligence before making any investment. Bitxmi News won't be responsible for any loss of funds.

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