A while ago, Coinbase announced that Dutch customers should not only indicate even better who they are. The timing of the news was remarkable. No changes in regulation had been announced by the European Union or the Dutch government at the time, but that has now changed.
Even stricter identification of crypto exchanges
Reuters writes Which the European Parliament a new bill has passed that obliges crypto exchanges and their users to do even more with identification. Traders are already required to indicate who owns an account on an exchange. In addition, individual wallets you use to send tokens to the exchange must be identified. You must also indicate for each transaction what it is intended for, along with your full name.
Op Twitter writes Ernest Urtasun, Vice-President of the European political party the Greens, said the measure is important. It should prevent money laundering. By using cryptocurrencies, money laundering is relatively easy using ‘smurfing‘, where a large amount is sent by dividing it into many small transactions. ‘Unhosted’ wallets (addresses without human identification) are very useful for this.
Yet peer-to-peer (P2P) transactions do not become clandestine. Presumably, the government itself can check to whom tokens have been sent, although this would require extra effort. You will therefore not see an identification requirement in your wallet app.
krhyme on the new EU-lines
It is also striking that the rules will only come into effect in 18 months – that is, at the end of 2023. But Coinbase has already implemented the scheme for Dutch users of the platform. It is not clear why it has done this, as other trading platforms have not yet implemented the scheme at the time of writing.
However, after 18 months, it is still checked whether the regulations need to be adjusted. There has been a lot of controversy about the proposal. For example, the IOTA Foundation wrote an open letter in April stating that the rules are too strict.