The EU may ban banks and crypto providers from dealing in controversial privacy-enhancing coins under new anti-money-laundering plans
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- The European Union may prevent ban banks and crypto providers from dealing in privacy-enhancing coins such as monero and zcash, CoinDesk reported Tuesday.
- Privacy coins are cryptocurrencies that keep information hidden on the blockchain.
- The leaked EU draft is under proposed amendments to anti-money laundering rules.
The European Union may prevent ban banks and crypto providers from dealing in privacy-enhancing coins such as monero and zcash under proposed amendments to anti-money laundering rules, CoinDesk reported Tuesday, citing a leaked draft obtained by the news site.
Privacy coins are cryptocurrencies that keep information hidden on the blockchain. The measure under consideration at the EU is aimed at avoiding risk stemming from crypto assets that are designed to avoid traceability, an EU diplomat told CoinDesk.
The proposal calls for crypto asset providers to verify the identity of customers even for occasional transactions of under 1,000 euros ($1,040) and to probe the nature of the business for larger payments, the report said.
"Credit institutions, financial institutions and crypto-asset service providers shall be prohibited from keeping …anonymity-enhancing coins," said a legislative draft circulated by Czech officials to the EU's other member states for comment. The Czech Republic will hold the EU Council presidency until the end of 2022.
Crypto service providers conducting business outside the EU would need to verify whether their counterparty is licensed.
The European Council and the European Parliament must agree to the bill to pass it into law. Such an agreement would widen the effort by the European Parliament to tackle so-called dirty money moved through digital channels including NFTs and decentralized finance.
The European Commission proposed its Anti-Money Laundering Regulation last year in part to vet practices at large financial institutions.
Monero was up 3.5% at $132.58 during Tuesday's session but has lost roughly 42% this year. Zcash was up 3% at $41.30 on Tuesday but for the year was down about 71%.