The EU restricts cash and cryptocurrency transactions

The European Union has decided to limit cash purchases to €10,000. The EU hopes to ensure greater control over cryptocurrency transactions above €1,000. Members of the bloc announced it on December 7, saying it was part of efforts to prevent money laundering.

New rule aimed at closing cryptocurrency loopholes

Czech Finance Minister Zbyněk Stanjura said the intention is: close loopholes and apply even stricter rules in all EU Member States“. Large cash payments of more than 10,000 euros therefore become impossible. Trying to remain anonymous when buying or selling cryptoassets becomes much more difficult.

New Anti-Money Laundering and Counter-Terrorism Financing Rules Impose on Crypto Asset Service Providers (CASP). In order to do this, the idea is to perform due diligence in particular with regard to customers carrying out transactions above €1,000. Self-hosted wallets are expected to increase their risk mitigation measures due to the arrival of PSAPs. The EU also uses the country classification system based on the recommendations of the Financial Action Task Force (FATF). The aim is to determine the risk of money laundering in each member state.

How will this affect DeFi?

Regulators are likely to target developers of DeFi platforms. It is unclear how the new requirements will be implemented, as anonymity is an integral part of the existence of the DeFi space. However, this may have no impact if the entity is not based in Europe and chooses not to comply. It may even be more difficult if a central entity does not control the DeFi protocol.

The risk of DeFi and how to regulate the sector is under consideration by regulators in Europe. A few months ago, the European Central Bank commissioned an investigation. This study recommends that DeFi regulation cover DAOs, platform developers and governance token holders.

Such a measure could affect the growth of the DeFi sector in Europe. But centralized crypto platforms will have no problem complying. In fact, they are already implementing anti-money laundering and anti-terrorist financing standards. European regulators are also questioning whether the MiCA rules can prevent a repeat of FTX’s collapse.

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Sami AYADI avatar
Sami AYADI

To the angelism of the proponents of the current monetary system, I am against DeFi, digital assets and the metaverse. Lawyer in Luxembourg, I am interested in cryptocurrency investment funds.

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