The ability to anonymously transact digital assets in the EU is under threat as the European Parliament votes in favour of imposing limits on payments by unverified crypto users.
This civil liberty is enshrined in physical cash, i.e., legal tender, making the vote somewhat contentious from a civil liberties standpoint.
According to a press release, lawmakers on the Economics and Civil Liberties committees voted on Tuesday in favour of the new anti-money laundering (AML) and terrorist financing regulation, which seeks to impose a $1,000 cap on transactions coming from unverified crypto wallets. This is despite the fact that research compiled using United Nations data, has found that anti-money laundering (AML) and know-your-client (KYC) rules have no effect on stopping illegal transactions, with their efficacy being deemed a rounding error by analysts.
European Union capital controls
The press release read:
Entities, such as banks, assets and crypto assets managers, real and virtual estate agents and high-level professional football clubs, will be required to verify their customers’ identity, what they own and who controls the company. They will also have to establish detailed types of risk of money laundering and terrorist financing in their sector of activity, and transmit the relevant information to a central register.
The limit is part of an overhaul of AML regulations, considered among other measures designed to stop businesses from accepting cash payments in a bid to lay the groundwork for CBDCs, which will create an undesirable surveillance state. Physical cash transactions offer privacy, but this Civil Liberties committee appears to be inadvertently encouraging Central Bank Digital Currency proponents, who aim to have end-to-end influence over people’s spending habits.
Central bank digital currency end game. Once it’s introduced, this will happen down the line. https://t.co/Ag7UAnfCCj
— Chris on Crypto⏫Ł₿ (@ChrisOnCrypto1) March 29, 2023
The EU is set to create a new European Union Anti-Money Laundering Agency, the AMLA, which has been given supervisory and investigative powers to “to ensure compliance with AML/CFT requirements.”
The AMILA will be tasked with monitoring transactions within and outside the European Union, and will supervise credit and financial institutions, classifying them according to their apparent financial risk level. These risks are amplified in today’s financial environment, characterised by ongoing traditional banking failures and forced inter-bank takeovers in an effort to limit financial contagion and panic. MEPs are also keen on giving AMLA power to mediate and settle disputes, ensure more oversight of supervisors while receiving whistle-blower complaints. Given the broad-brush strokes of such powers, questions regarding conflicts of interest for the regulatory body are certainly on the table.
A total of 99 lawmakers voted in favour of the new plan, while there were six abstentions.
Damien Carême, the French lawmaker who leads the parliament’s negotiations on the overhaul, told reporters that the law wouldn’t prohibit payments because the cap only applies to unregulated wallets and unverified wallets. “We are absolutely not preventing crypto transactions. It’s just when identification isn’t possible.”
This mission creep inadvertently undermines current civil liberties enjoyed via physical cash transactions, and uses a ‘guilty until proven innocent’ approach on law-abiding cryptocurrency users who, perhaps naively, expect the same rights they currently enjoy with physical cash to be extended to digital money. The plan comes as another manifestation of the EU’s ongoing crackdown on civil liberties, and liberty-enabling technology protected by the European Charter of Fundamental Rights.
The right to privacy or private life is enshrined in the Universal Declaration of Human Rights (Article 12), the European Convention of Human Rights (Article 8) and the European Charter of Fundamental Rights (Article 7).
The proposed regulations will now go through several weeks of negotiations before advancing a plenary vote in Parliament. At that point, it may advance to negotiations between the Parliament, Council, and European Commission.
ECB president Lagarde concerned about central bank’s role
Meanwhile, the European Central Bank’s (ECB) president Christine Lagarde recently said that central banks might lose their role as ‘anchor’ of the financial system if they don’t adopt draconian central bank digital currencies (CBDCs). Unbeknownst to the general public, Central Bank Digital Currencies have no benefits for European citizens, provide no solutions to Central-Bank-induced monetary debasement, and merely serve to open a route for precise end-to-end influence on individual spending.
Where do we stand, we Central Bankers? We have been operating as a monetary anchor in relation to Commercial Banks and private money. If we are not in that game, if we are not involved in experimenting and innovating in terms of digital central bank money, we risk losing the role of anchor that we have played for many, many decades.
Lagarde highlighted points in history when a central bank wasn’t available to serve as so-called ‘monetary anchor’, which she said ‘precipitated crisis after crisis’.
“Do we want to go back to those days?” Lagarde asked. “Probably not. I would say certainly not from our vantage point. As a result of which, we have to respond to the demand for those digital payments in order to maintain the role of anchor that we have been playing regularly.”
Lagarde’s comments echo executive ECB board member Fabio Panetta, who stressed the need for stringent crypto regulations and the supposed need to adopt CBDCs for central banks to keep their role as ‘anchor’.
In a world of growing automation, this role faces obsolescence sooner rather than later. After all, apolitical, deterministic and censorship resistant cryptocurrencies such as Bitcoin and Litecoin can do a better job as a monetary ‘anchor’. That’s arguably the point of their existence.
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