Despite industry protests over the breach of privacy and stiffling of industry innovation, on Wednesday, the European Union finally agreed on landmark anti-money laundering rules for crypto transactions.

Lawmakers agreed on the verification of customer identity for crypto transfers between two regulated digital wallet providers, even for the tiniest amounts.

Nevertheless, payments involving unhosted private wallets will mostly be left out of laundering checks. Unhosted wallets are also known as cold storage or self-custody and enable the user to maintain a cryptocurrency balance outside of an exchange. This is essentially the same as holding banknotes in your own purse or wallet. Example of such unhosted wallets are Ledger‘s products or the popular Exodus crypto wallet. 

For the past three months, EU lawmakers and government representatives have been deliberating on the bill, which the European Commission introduced in July 2021.

EU lawmaker Ondřej Kovařík confirmed the draft agreement in a tweet, and said:

“EU institutions have found a provisional political agreement on the Transfer of Funds Regulation. I believe it strikes the right balance in mitigating risks for fighting money laundering in the crypto sector without preventing innovation and overburdening businesses.”

The agreement will still need to be translated into legislature and gazetted in the EU’s Official Journal.

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