EU Not Implementing Ban on Self-Custodial Crypto Transactions and Wallets.

….Incorrect rumors suggesting the EU's intention to prohibit anonymous crypto wallets and self-custodial transactions circulated widely over the past weekend. These claims stemmed from a misinterpretation of statements made by a member of the European Parliament regarding the approval of the new EU Anti Money Laundering Regulation (AMLR). However, these reports were swiftly debunked by Circle’s EU Strategy and Policy Director, Patrick Hansen, who clarified that no such ban exists.

The crypto community was sent into a panic due to these inaccurate reports. The confusion arose from misinterpretations of comments made by Patrick Breyer, a member of the European Parliament, confirming the approval of the new EU AMLR. However, it was misunderstood as a ban on self-custodial payments and anonymous crypto wallets.

Several voices within the community promptly responded to clarify the situation. Freddie New, Head of Policy at Bitcoin Policy UK, emphasized the importance of reading the legislation and highlighted that self-custody remains legal despite the AMLR.

Patrick Hansen reiterated that self-custody wallets and transactions are not banned under the AMLR. However, he noted that paying with crypto using a non-KYC'd self-custody wallet might face restrictions, especially with merchants. Nevertheless, these changes were already agreed upon months ago, and the AMLR primarily focuses on anti-money laundering measures rather than crypto-specific regulations.

Hansen clarified that the AMLR applies to institutions labeled as "obliged entities" or "OEs," which include financial institutions and crypto-asset service providers (CASPs). However, hardware and software providers, as well as self-custody wallets without access to users' assets, are exempt. CASPs must adhere to standard KYC/AML procedures, aligning with existing regulations under AMLD5 and the Markets in Crypto-Assets legislation (MiCA).

The AMLR does not impose a ban on self-custodial payments or wallets but reinforces AML/CFT rules for CASPs and other obligated entities. Additionally, the AMLR's impact on the crypto industry is deemed to be limited, with the legislation set to be fully enforced by summer 2027.

In summary, the EU's AMLR does not entail a ban on self-custodial crypto transactions or wallets, but rather emphasizes anti-money laundering measures within the crypto space.