The global crypto community is up in arms over proposed new European Union rules that would sanction the invasion of personal privacy and treat new technologies less fairly than cash or traditional bank transfers.
The EU Parliament seeks to extend checks to cover privately managed unhosted wallets that store crypto, despite fears that such rules could prove unenforceable:
Examples of an unhosted, or non-custodial, wallet include MetaMask, WalletConnect, or hardware wallets such as Ledger and Trezor.Â
âMoney going to unhosted wallets may end up in the wrong place, for example with terrorist groups,â according to Paul Tang, one of the members of the European Parliament on the Economic Affairs Committee that will vote on the matter later this week.
Data Collection an Impossible Task
Tang, a Dutch socialist, tweeted earlier this week that wallet owners would need to be identified in the same manner as bank customers are. The draft regulation would require crypto service providers not only to collect personal data related to transfers made to and from unhosted wallets (as they are already obliged to do) but also to âverify the accuracy of information with respect to the originator or beneficiary behind the unhosted walletâ. Such verification would prove problematic, if not impossible, say those service providers.
âTravel Ruleâ Another Data Harvesting Scheme in Disguise
The likes of Coinbase are already objecting to the EUâs so-called travel rule, which proposes to extend anti-money-laundering identity checks to payments made in digital currencies, even if they fall under an existing threshold of 1,000 euros (US$1,098).
âThe travel rule ⌠is really a massive and indiscriminate personal data collection and transfer scheme,â said MikoĹaj Barczentewicz, associate professor at the University of Surrey in the UK and Fellow of Stanford Law School (US).
Proponents of the new rules, Barczentewicz added, are âsaying that it is necessary for all crypto service providers to report sensitive data of their clients, even when there is not even the slightest suspicion of a criminal connectionâ.
Even if the 1,000 euro threshold were maintained, he said, such a privacy restriction would âvery likely not be as effective as less rights-restricting alternativesâ because those with nefarious aims could simply circumvent them.
What we seem to be dealing with here is an attempt to do âsomething about crypto and crimeâ without a serious, evidence-based reflection on how best to do it.
MikoĹaj Barczentewicz, associate professor, University of Surrey (UK), and Fellow of Stanford Law School (US)
In more encouraging news earlier this month, the EU Parliament voted against a proof-of-work ban, allowing BTC holders at least to breathe a collective sigh of relief.
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