EU Proposes to Ban Non-Custodial Wallets

A bill has been passed down to the EU Parliament proposing to ban wallets that do not require users to give any personal info.

The EU has been hard at work trying to figure out how they can regulate crypto in the country. Just a couple of weeks ago they had proposed the idea to ban Bitcoin mining citing environmental concerns. This idea was shot down almost immediately; however, the same can not be said about the proposal to ban no KYC wallets.

The ban on private wallets was overwhelmingly approved by the ECON and LIBE committees. The order still has a couple of stops to make before anything is official though. First, it will have to go through the EU parliament, the European Commission, and the European Council. If this does end up going through it would affect some of the most popular wallet providers in crypto like Metamask and Ledger.

This is not the first time we have heard of countries trying to do this as Estonia is trying to ban non-custodial wallets as well. This would also affect many users as The Atomic wallet is also a popular wallet that was created in Estonia. Coinbase CEO Brian Armstrong believes the proposal is "anti-innovation, anti-privacy, and anti-law enforcement," basically that they are holding crypto to a different standard than fiat currencies.

Not everyone is in favor of this but it is important to have some information on if they are customers. Nobody is registered with a no KYC wallet so that means nobody is really a customer. There is no service being paid for it is just a p2p exchange and place to store a currency. When it comes back onto exchanges, the only issue is that there is now no-cost basis for when the assets were purchased. At this point, you would just have to report the gains as income if you wanted to ensure that you have no problems with the IRS. We will see how this plays out but there should not be much to worry about in the meantime.