The digital euro for the European Union will have anti-money laundering provisions that are used for private cryptocurrencies. However, an EU Commissioner has said that the AML laws adopted for the digital euro will not be as tough as those used in regular cryptocurrencies such as Bitcoin.
EU Commissioner says digital euro AML laws will be lesser
Mairead McGuinness, an official with the European Commission, has said that private intermediaries such as banks will play a role if a central bank digital currency (CBDC) for the European Union is developed.
McGuinness also said that new laws would be formulated before any decision about issuing this CBDC is made. The European Central Bank has already hinted about exploring a CBDC and how these digital currencies can complement banknotes and coins. The ECB is currently assessing the existing policy to determine if it should go ahead with developing the CBDC.
McGuinness said that “a digital euro should comply with AML requirements, but this is different to the current discussion on cryptoassets. We will be assessing whether a higher level of privacy should be made available, in particular, for low-value transactions, depending on the risk characteristics of the digital euro.”
If the ECB is developed, it will be issued through payment service providers such as commercial banks. This will aid in identifying customers and distributing currency while making it easier for people to access the CBDC.
Regulating the digital euro
The European lawmakers recently passed a controversial AML law regarding Bitcoin payments. Under these new AML rules, users will be required to provide identification even when transacting a small amount of crypto.
European finance ministers also recently discussed the different types of wallets to be used in holding a digital euro. These wallets will adopt fewer verification processes, and the risk will also be significantly lower. Smaller payments between people in close proximity could also be done offline.
However, the ECB will not make any formal decision until the new laws are implemented. If it will be developed, a proposal for regulating a digital euro will be adopted by the first quarter of 2023.