Written by: Xiao Sa Team
The Sajie team noticed that around mid-January 2024, the European Union became the first in the world to formulate a comprehensive cryptocurrency regulatory framework bill, the Markets in Crypto Assets regulation bill (MiCA) (MiCA bill for short). ), major jurisdictions once again proposed to add to their own package of anti-money laundering regulatory rules and introduce more stringent restrictive rules for cryptocurrency transfers and private wallet supervision, including restricting anonymous transactions, increasing platform KYC obligations, etc.
On March 23, the European Parliament and the European Council officially turned the above ideas into reality and issued the latest anti-money laundering "open box order". Today, the Sajie team will interpret the new law for everyone and analyze the examples it may produce in the future. effect.
Overview of the EU’s latest crypto-asset “open box order”
"Opening the box" was originally an industry slang. It originally referred to the act of using hacking software to steal all other people's information, including but not limited to ID numbers, social security card numbers, bank card account numbers, personal ID photos, etc., and then exposing them. , now generally refers to all behaviors that "reveal" the true identity information of netizens, similar to "human flesh".
As mentioned earlier, the European Parliament and the European Council have introduced the latest new anti-money laundering regulations for cryptocurrency. The reason why we call it an "open box order" is mainly because the regulatory purpose of this new regulation is to "eradicate" The anonymity of cryptocurrency transactions is used to regulate money laundering and the use of crypto assets to evade taxes and transfer assets to avoid supervision. The main rules are: (1) No unidentified self-hosted crypto wallets (i.e. private wallets) may be used to make cryptocurrency payments of any size within EU jurisdictions; (2) Cryptocurrency companies should not deal with transactions above €1,000 Carry out due diligence. The main subjects regulated by this regulation are cryptocurrency users and cryptocurrency service providers (VASP).
Sajie’s team believes that the latest encrypted asset “box opening order” is an extremely “eye-catching” new regulation with both pros and cons. On the one hand, this regulation cooperates with the EU's previously introduced MiCA Act and the rules for collecting cryptocurrency transfer information (TFR), and has been able to maximize the use of legal tools to regulate money laundering, tax evasion, and asset transfers currently carried out in the market using cryptocurrency as a carrier. , raising terrorist funds and other criminal acts. At the same time, this "opening the box" behavior can also pave the way and prepare for the subsequent designation and implementation of related crypto-asset tax policies, so that the tax objects and tax bases can be further clarified. Clear; however, on the other hand, the "open box order" is extremely crude. It directly erases "anonymity", one of the core and most essential features of cryptocurrency, and also makes the blockchain-based ( Public chain) The financial ecosystem that has long been established based on the technical characteristics of "decentralization" has been shaken.
But in general, not only is the regulation of crypto assets becoming stricter, but the EU's new anti-money laundering law has also imposed a new round of strict controls on all tools and channels that can be used for money laundering. Under the new Anti-Money Laundering Act, undisclosed cash payments exceeding €3,000 are prohibited in commercial transactions, while cash payments of €10,000 are completely prohibited in commercial transactions. In addition, sales entities related to the luxury goods industry must conduct identity information verification similar to KYC on customer transactions and retain it for inspection. Professional football, which was previously the hardest hit area for money laundering, will be closely supervised by the European Union. Many famous teams have already begun compliance rectification and are expected to reach compliance standards after the new anti-money laundering bill is officially implemented in the next three years.
The impact of the EU’s latest crypto-asset “open box order”
As mentioned before, the EU’s latest crypto-asset “open box order” does have extremely obvious positive and negative impacts, and as a major jurisdiction in the world, its relevant legislation and jurisdiction will produce important regulatory demonstrations for the entire crypto-asset industry. It is expected that subsequent regulatory rules in various countries will refer to this legislation. So, how to correctly see this butterfly effect of EU regulation?
On the bright side, the EU’s “open box order” does not ban the existence of cryptocurrencies, nor does it restrict users’ use of cryptocurrencies. Instead, it puts a heavy “shackles” on users and VASPs – they must be publicly disclosed. , use and invest in cryptocurrencies in a regulated environment, and does not exclude subsequent taxation of users’ holding and trading of cryptocurrencies. Compared with a blanket ban on cryptocurrency, this is undoubtedly a more "flexible" regulatory measure, and it is also in line with the Sajie team's consistent attitude towards crypto assets: it is better to block it than to open it up.
However, this relatively "flexible" supervision is also soft but hard at the same time. The Sajie team believes that the core reason why the crypto community and many Web3 participants and builders recognize and believe in blockchain technology and the related narratives of crypto assets is that this type of crypto assets based on blockchain technology has its unique characteristics. The "technical trust" feature can operate without the need for centralized supervision, and at the same time gives users extremely free control over their assets. Once users of encrypted assets are "unboxed", the anonymity of encrypted assets will be lost, and it will also cause obstacles to the rights of users of encrypted assets to freely control their own property. But the most serious thing is that this will This allows traditional centralized regulatory power to spread to the crypto asset community.
In fact, every EU regulatory tightening policy in the name of "public safety", "financial security" and "combating money laundering crimes" has not won the support of the majority of the public. For example, in 2017, the European Commission publicly solicited public submissions for a bill to restrict cash payments. More than 90% of citizens expressed opposition to the bill. The biggest objection is that this method cannot effectively prevent large-scale and systematic money laundering crimes, but instead improperly restricts civil liberties. The right to use one's own property.
From this point of view, the Sajie team believes that the EU's "open box order" is an overreach. Once it is officially implemented, it will be difficult to take into account the various legal interests of finance, technological innovation, financial order, and social order security. Finding an appropriate balance will more likely push local EU crypto-asset users from the path of gradually starting to use crypto-assets in a compliant manner to other unregulated crypto-assets. VASPs will face the dilemma of heavy KYC obligations and the gradual loss of crypto asset users.
In addition to cryptocurrencies, does the EU’s latest crypto-asset “unboxing order” also cover other crypto-assets?
A simple answer: The “open box order” currently only affects cryptocurrency transactions, but does not rule out the possibility of covering other crypto assets in the future.
From the current point of view, the purpose of the "open box order" is to curb the largest cryptocurrency among crypto assets. Although within the EU regulatory agencies, there is no need to apply anti-money laundering laws to crypto assets such as NFT, DeFi, GameFi and Web3 gameplay. There have been fierce debates about the package of regulations, but at present, we do not see intuitive signs from the legislative cases that the EU will include other crypto-assets other than cryptocurrencies into supervision.
The Sajie team believes that this is mainly caused by two reasons: (1) The size of other crypto-assets other than cryptocurrencies is too small. Although they have the qualifications to become a "substitute" for cryptocurrencies, they currently do not have one. The market is large enough to enable other crypto-assets to become tools for criminal activities such as money laundering and tax evasion; (2) The EU is still cautious enough in the legislation related to the supervision of crypto-assets and is unwilling to use other crypto-assets that have not yet matured and related technologies. It is put into the iron cage of the system before it can be applied on a large scale.
In this way, we can simply draw a conclusion. Whether the subsequent development of other crypto assets and various types of gameplay can go smoothly will largely require the joint efforts of all Web3 builders to form a relatively effective set of self-management systems. Only through supervision and self-driven mechanisms can we reach consensus and form synergy with supervision.
write at the end
Judging from the EU's judicial practice, although the "Open Box Order" requires a three-year window period after it is announced before it can be officially implemented, the purpose of this window period is only for compliance rectification. In other words, currently in EU jurisdictions On this piece of land, it is no longer possible to use self-hosted wallets for anonymous cryptocurrency payments. In communicating with some crypto asset practitioners, the Sajie team found that everyone has different views on this. Some experts who prefer a free business environment believe that the "open box order" is an attack on the EU's free competition business system. This provision is even suspected of violating basic civil rights.
The Sajie team believes that just as we cannot easily make value judgments on a new thing, in the current era of frequent crimes using cryptocurrency, the pros and cons of the "open box order" should be evaluated based on the results of its subsequent implementation. Although the EU currently lacks sufficient statement on the effectiveness and necessity of implementing the "open box order" to combat crime, the EU itself, as the first person to dare to be the first in the world and the first to eat the "crab" of regulating crypto assets, has the courage to do so. At least it's worth encouraging.
