Key Takeaway:
- The European Union is about to put surveillance on exchanges.
- Coinbase said that cash was preferred method of illicit activities and not digital assets.
Coinbase is urging the public to oppose the European Union’s amendment to the “Transfer of Funds Regulation”. Coinbase is urging because it would require exchanges to collect, verify, and report information on non-customers who use self-hosted wallets.
If the Transfer of Funds Regulation is implemented, it will unleash an entire surveillance regime on exchanges such as Coinbase, stifle innovation, and undermine the self-hosted wallets that individuals use to securely protect their digital assets.
Here are some of the “bad facts” that Coinbase has identified as leading to “bad law” :
- Digital assets like Bitcoin, Ethereum, and others are a primary way criminals hide and move money,
- Law enforcement has no way to track these movements.
- Requiring collection and verification of personal information associated with self-hosted is not a violation of their privacy.
According to Coinbase, the truth is that, in general, digital assets are a significantly inferior way for criminals to conceal their illicit financial activity. That is why, according to the best available research, cash is still by far the most popular way to conceal the illicit financial activity. Unlike cash, law enforcement can use advanced analytics tools to track and trace digital asset transfers.
None of this necessitates upsetting wallet holders’ established privacy expectations because the open architecture underlying digital assets is public and provides unprecedented transparency into transaction details.
In short, digital assets, as well as the immutable nature of blockchain technology, improve the ability to detect and deter illicit activity. However, rather than embracing and capitalizing on the benefits of increased digital asset use, the EU’s proposal would disregard them and impose a slew of new privacy invasions on wallet users.
Among the most egregious proposed provisions are new requirements for exchanges to collect, verify, and report information on non-customers who use self-hosted wallets. Another risky provision would require exchanges to notify “competent authorities” of any transfer from a non-self-hosted customer’s wallet that is equal to or greater than 1,000 EUR, regardless of any suspicion of wrongdoing. The proposal even allows for a total ban on transfers to self-hosted wallets, despite the fact that there is no evidence that such a ban would have any effect on illicit activity.
Further, Coinbase said that we have a limited amount of time to act, and we must make our voices heard. A vote on the draught proposal from Parliament could take place as early as Thursday, March 31st. If you care about protecting people’s privacy and directing the law toward solutions that address legitimate concerns about the illicit use of digital assets, now is the time to speak up and be heard. We must speak out against this proposal with a unified, strong voice before it is too late. The vote is expected to take place this week, so time is running out.
