End of Crypto Idea. KYC AML Control

Council of the EU Press release 16 May 2023 10:30
Anti-money laundering: Council adopts rules which will make crypto-asset transfers traceable

The EU is making it more difficult for criminals to misuse crypto-assets for money laundering purposes

The EU is making it more difficult for criminals to circumvent anti-money laundering rules via crypto currencies. Today the Council adopted updated rules on information accompanying the transfers of funds by extending the scope of the rules to transfers of crypto assets. This ensures financial transparency on exchanges in crypto-assets and provides the EU with a solid framework that complies with the most demanding international standards on the exchange of crypto-assets, ensuring that these are not used for criminal purposes.

Today’s decision is bad news for those who have misused crypto-assets for their illegal activities, to circumvent EU sanctions or to finance terrorism and war. Doing so will no longer be possible in Europe without exposure – it is an important step forward in the fight against money laundering.

Elisabeth Svantesson, Minister for Finance of Sweden
Elisabeth Svantesson, Minister for Finance of Sweden
Under the new rules, crypto asset service providers are obliged to collect and make accessible certain information about the sender and beneficiary of the transfers of crypto assets they operate, regardless of the amount of crypto assets being transacted. This ensures the traceability of crypto-asset transfers in order to be able to better identify possible suspicious transactions and block them.

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7 thoughts on “End of Crypto Idea. KYC AML Control”

  1. Aren’t there also privacy laws? Like law enforcement can’t just look at anyone’s traditional bank accounts and transactions without a warrant in most places. So if the EU does this, how will they be able to reconcile the fact that anyone with access to the KYC database will be able to look at the public ledger/blockchain?

    If they insist on passing this law they need to come up with a way to control the access. For instance, make it a double blind system where when you query for Bob’s records, you don’t get to see any details like their wallet address. You just get to see the trail of transactions.

    Even better, the law could specify that users must ramp onto the DeFi protocol with say zero proof KYC. Once in, users should be entitled to as much privacy as possible. Also ensure the law bans selling your ZP identity to someone or spoofing/stealing someone’s identity in order to ramp onto the protocol. Which are mostly already existing laws, anyway.

    If they pass this law first without meshing it with existing privacy laws like the GDPR, they’re going to create a law clusterfuck and be fucking over legit users’ (who are the huge majority) privacy.

    Ah who am I kidding, that’s all too rational /s

  2. Most centralized platforms already require KYC to be able to abide to regulations and avoid sanctions, the problem might come how hard these regulations will fall unto defi and if they are able to apply effective regulations to defi. But the problem might come with anything that connects the crypto world to the fiat world, I believe those are the ones that are able to fall into these measures.

    At least there are some viable solutions for that kind of situation as other users have told, some kind of digital ID that while on-chain, people can’t just search your wallet and be able to get your personal private information. Certainly ZKp is a way, but just for adding to the discussion, there can also be [Decentralized IDs supported by TEEs](https://oasisprotocol.org/blog/what-you-can-build-with-the-industrys-first-confidential-evm-sapphire), that allow users to have soul bound tokens via confidential NFTs which you are able to lend access to the party that requires your ID, and you can revoke the access just the same. No one that doesn’t have access to the cNFT can have access, and if you have it or you got permission to check one, it just takes a wallet signature to open it and see what is inside. This technology is also being shared with other EVM compatible networks through the OPL that works as a [cross-chain privacy bridge](https://oasisprotocol.org/opl).

  3. I believe that projects can still stay regulatory compliant with the use of ZKPs like NexeraID and PolygonID which will help encrypt our KYC information.


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