Rapture #181: Trouble in the EU
Today, two committees in the European Parliament came to a cross-party compromise for an upcoming vote on a proposal that will create new burdens for the crypto industry. Under this proposal, crypto companies, such as exchanges, would need to have information on all users that interact with them. This information would be required for both the receiver and sender. If you are interested in reading more details than I go over here, this thread is excellent.
The resulting effects of this proposal
In essence, KYC information would need to be gathered on any wallet interacting with an exchange. In practice, this change would mean that users could not withdraw their funds into a wallet unless Coinbase had gathered KYC like data on that particular wallet that could tie the wallet to a specific identity.
Currently, users are able to withdraw digital assets from exchanges into any wallet and the exchanges have no idea the identity tied to that particular wallet.
Additionally, any transaction over 1,000 euros to a unhosted wallet (i.e. a user's personal wallet) would have to be reported to the relevant AML authorities. This change would create huge new compliance burdens for exchanges.
The proposal passed the committees with slim margins, and the EU parliament as a whole must still pass the proposal in a couple of months before it becomes law.
Market reaction
The market did not react positively to the news by any measure. BTC is down more than 3% on the day, and altcoins are down far more on average.
Now, this movement down also could have been driven by the fact that the S&P 500 is down more than 1.5% on the day. In my opinion, the EU news played a crucial role in the slight pullback of this most recent upward trend.
Regardless, the market will closely watch how this proposal develops and if other countries decide to follow suit.
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