On March 31, 2022, the European Union (EU) Parliament passed a controversial legislative proposal aimed at eliminating anonymity in cryptocurrency transfers. The draft law mandates that all crypto service providers—such as exchanges and custodial wallets—must collect identifying information for both senders and recipients of any crypto transaction. This data must be made available to authorities upon request, with no exception for transaction amounts or the nature of the wallet involved.
Critically, the proposed law also targets transactions from “unhosted wallets”—those managed directly by users without a third-party intermediary. If enacted, the rule would enforce total traceability across the blockchain, treating even peer-to-peer crypto transfers as subject to anti-money laundering (AML) scrutiny. Unlike existing regulations for traditional payments, the bill eliminates any minimum threshold, meaning every single crypto transaction, no matter how small, will fall under this requirement. The regulation still needs final approval from both the EU Council and national ministers to become law.
Statements from EU Officials
“Illicit flows in crypto-assets move largely undetected across Europe and the world, which makes them an ideal instrument for ensuring anonymity. As illustrated by all the recent money-laundering scandals... the EU will close this loophole.” – Ernest Urtasun
“We aim to protect and normalize. Our objective is to enable crypto use by people of good faith while stopping its use for terrorism, extortion, or laundering. A decade after Bitcoin’s invention, it’s time for regulation.” – Assita Kanko
While the intentions may be noble on paper, the backlash from the crypto community was swift and severe.
Industry Reaction
Coinbase CEO Brian Armstrong called the proposal a massive step backward: “This eviscerates all of the EU’s work to be a global leader in privacy law... It punishes crypto users and threatens personal freedoms.”
Bill Hughes of ConsenSys added, “This regulation won’t meaningfully reduce crime. But it will burden individuals and businesses engaging in lawful crypto activity.”
Members of the European People’s Party labeled the proposal a “de facto ban” on self-hosted wallets and called it regressive. Blockchain for Europe further warned of broad consequences: “This will result in poor consumer protection, alarming privacy risks, and diminished global competitiveness for the EU. It’s a missed chance to support smarter enforcement practices.”
Privacy Coins Surge
The proposal has had unintended effects: between March 14 and April 14, 2022, Monero (XMR) surged 35%. The rally reflects growing awareness about the value of anonymity in financial transactions. Crypto holders fear that government overreach into blockchain systems could lead to surveillance, data breaches, and control over financial freedom.
Critics of the regulation point out the risks of centralized data collection. Once crypto service providers are required to store personal financial data for every sender and receiver, these databases become prime targets for hackers. With crypto theft and data leaks already common, this raises serious concerns over how such sensitive data would be safeguarded.
Why Monero May Be the Solution
If you believe privacy is a human right—not a privilege—you might want to consider adding Monero to your crypto portfolio. Unlike traceable coins like Bitcoin or Ethereum, Monero employs privacy-preserving technologies such as RingCT, ring signatures, and stealth addresses. These ensure the identity of the sender, recipient, and transaction amount are completely anonymous. No one—not even third-party observers—can see how much XMR you own.
To fully preserve your privacy, you should use both hot and cold wallets. For hot storage, consider XMRWallet. It’s an open-source online Monero wallet that requires no downloads, no signups, and no KYC verification.
With XMRWallet, you stay in complete control of your private keys and transactions. It supports multiple languages and is entirely free—including import of previous transactions. Whether you’re an advocate of financial sovereignty or just want peace of mind, create your XMR wallet now and take ownership of your privacy.
