The European Commission released an extensive set of proposals that threaten to stifle innovation in the burgeoning cryptocurrency sector in addition to subjecting crypto users to blanket surveillance.

The package includes several measures, all of which aim to increase blanket surveillance on every citizen within the EU. Apart from an EU-wide ban on physical cash payments exceeding, €10,000, one proposal also aims to dramatically increase oversight of so-called crypto asset service providers.

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As announced by the commission this week, the framework would include yet another new task force dedicated to anti-money laundering and the combating of financial  terrorism (AML/CFT). Worried about money slipping out of the clutches of a dysfunctional monetary system, the new EU AML Authority (AMLA) task force “will be the central authority coordinating national authorities to ensure the private sector correctly and consistently applies EU rules.”

It will attempt to establish a unified AML system across the EU, the “Single EU Rulebook for AML/CFT.”

“Existing  national registers of bank accounts will be connected, providing faster  access for FIUs to information on bank accounts and safe deposit  boxes,” the commission wrote in its announcement. Law enforcement will have access to this system to accelerate the investigation of whatever it deems cross-border financial crime.

The rules are set to be  extended from “only certain categories of crypto-asset service  providers” to “the entire crypto sector, obliging all service providers  to conduct due diligence on their customers.”

However, many service providers in the EU already conduct proper due-diligence under current rules, rendering this new initiative unclear in its scope.

These amendments  “will ensure full traceability of crypto-asset transfers, such as  Bitcoin, and will allow for prevention and detection of their possible  use for money laundering or terrorism financing,” the EU Commission  stated.

Additionally, providing so-called “anonymous crypto asset wallets”  will be “prohibited” in order to force AML/CFT requirements. How the commission seeks to enforce such a ban is unclear.

In its Q&A sheet, it writes that the “proposed rules ban the possibility to  open or use an anonymous crypto-asset account.”

The press release  doesn’t clearly explain whether the opening of “anonymous” wallets for  customised exchanges will be prohibited, or whether “anonymous” wallets will be prohibited in general. The fact that the EU wants to ban non-custodial wallets suggests an intention to completely crack down on financial privacy and freedom.

Following recommendations from the Financial Action Task Force (FATF), the EU will categorise non-EU countries depending on their assigned status by FATF, which means that countries that do not fall in line will be grey – or blacklisted.

While the legislative package must still be discussed in the European Parliament, the Commission itself is confident that the operation will be approved by 2024, assuming the EU doesn’t come apart by then.

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