EU vote on monitoring cryptocurrency transactions – What are the risks for the ecosystem?

The European Parliament adopted in committee an amendment proposal which aims to strongly monitor transfers to self-hosted (non-custodial) wallets. If there are a few steps left before a final adoption of the measure, it is one more step towards a hardening of the conditions of existence of crypto companies. We take stock of the risks, and the next steps to come.

The European Parliament is moving towards strong oversight of self-hosted wallets

As a reminder, self-hosted wallets are those that do not depend on a centralized entity to hold cryptocurrencies. We can put in this category “hardware wallets”, such as those offered by Ledger, as well as all those where the user has his own private key.

These wallets are logically little monitored, unlike a wallet offered by an exchange platform. Which is not to the taste of some European legislators, who wish to have a look at the cryptocurrencies that pass through these means .

At the beginning of the week, we explained to you that the vote on an amendment on this subject was planned by the ECON Commission. It provided for two strong measures:

  • The collection of information on cryptocurrency transfers by regulated services , regardless of the amount
  • Monitoring of self-hosted wallets, with regulated platforms that would be required to collect information on the nature of transfers and fund holders

Contrary to what we have read here and there, this is not a ban on self-hosted wallets , but in fact, it would make the work of companies extremely complicated. This of course raises questions of feasibility: how to monitor such transactions, on a large scale? And above all, why would the European Union give itself the right to monitor digital wallets so closely, when it does not do so for other types of transactions?

The monitoring of cryptocurrencies in progress

The vote was validated yesterday in committee, so this is a first step towards more monitoring. As we know, cryptocurrencies are generally already traceable, transactions being recorded in often public registers. This type of measure would therefore be a considerable obstacle to the fluidity of transfers , and pose major logistical problems.

The hope for the ecosystem is that this vote is by no means final. The amendment must be examined and discussed by several bodies of the European Union . The proposal will be put on the table again in mid-April, with a discussion including the European Parliament, the European Commission and the Council of Europe.

This phase should take a few weeks, and will make it possible to introduce changes to the proposal. Nothing is therefore set in stone for the moment, but the vote showed a desire to go in the direction of surveillance :


Everything will therefore be played out in the weeks to come, and we will see if any changes will be made with regard to this project.

The ecosystem of cryptocurrencies in danger?

As mentioned above, this proposal does not only pose ethical problems. If validated, it would be such a brake for exchange platforms that the smallest ones could well decide to no longer authorize transfers to self-hosted wallets . For others, like Binance or Coinbase, this would drastically increase processing costs:

It also means that identifying information like cryptocurrency holders’ names, addresses, or other sensitive data would be tied to their wallet addresses and all of their blockchain transactions .

The crypto industry is currently mobilizing to voice its concerns about this. The measure is not only contrary to the ideals defended by the ecosystem, it could have considerable consequences on its long-term development . We will therefore closely monitor the developments and the next key dates which will give us more indications on the future of cryptocurrencies in Europe.

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