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Finally, EU Approves Crypto-ID Mandate Raising More Concerns

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At long last, the approval for the Markets in Crypto-Assets (MiCA) regulatory structure has landed after a long period of deliberation.

However, instead of the recent news bringing optimism, it raised more concerns.

Crypto-ID Mandate

MiCA (Markets in Crypto Assets), launched in 2022 concluded on Tuesday, May 16, 2023.

The anticipated EU regulatory framework got approval from the finance ministers and it will be effective by 2024.

With the latest council’s approval of the MiCA regulatory framework, expected to be released last February, the EU arrived at a notable turning point in assets regulation.

This innovative legislation aims to promote a standard approach to cryptos all over the European Union.

However, the legislation was hindered by delay and was rescheduled last April.

Also, after the announcement, the major feature of the Markets in Crypto Assets law has raised controversies.

According to Regulation of The European Parliament And The Council, there is a mandatory identification stipulation for every crypto transaction within the perimeters of the 27 EU states.

To make sure that the payment structures operate flawlessly and handle the risks of criminal activities, a proposal was made.

This proposal aims to inspect whether the information of the person receiving or sending funds is correct.

However, this particular ID mandate will be only needed for personal money transfers which are more than EUR 1,000.

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European Union New Laws for Cryptocurrency Users

In the EU’s new rules for crypto users, there are exceptions for transfers connected to others which is more than EUR 1,000.

Also, a transfer that involves anonymous electronic money or cash has exemptions.

In addition, in circumstances where there are logical suspicions of terrorist financing or money laundering, exemptions apply.

The major objective of these laws is to reduce illegal activities and also maintain an efficient payment system.

According to Elisabeth Svantesson, Sweden’s Finance minister, implementing these laws protects European investors and stops the misuse of the crypto industry.

Is Ledger in Agreement?

Ledger has also launched its new update for its Nano X after the MiCA news.

Ledger is a well-known hardware wallet for its non-custodial nature.

The wallet issuers or any other entity can’t access a user’s information or wallet in this new update.

The latest feature (Ledger Recover) allows social recovery of the user’s seed phrases.

It encrypts the user’s seed phrases up to 3 shards sent to three different bodies.

Crypto-ID Mandate Raising More Concerns

Users are concerned about Ledger’s ability to encrypt the seed phrase and transmit it without forcing users to type it in again when social recovery is allowed.

Popular hardware wallets like Ledger are known for being non-custodial.

Non-custody refers to the requirement that no one, including the wallet provider, should have access to a user’s wallet or its contents.

The users are naturally doubtful of Ledger’s capacity to distribute the seed phrase in light of this situation.

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This is because it raises questions about whether Ledger has surreptitiously saved this information. CZ is one of those doubters.

The CEO of Binance made a snarky remark about Ledger possibly changing its course.

Some users contend that this refers to existing Nano X wallets, not new ones, as Ledger added social recovery functionality to them.

In other words, there might be a backdoor that allows the seed phrase to be stored in the company’s wallet lines.

These concerns show that Ledger needs to be more transparent and clear about its security procedures and how it handles user data.

 

 

 

 

 

 

 

 

 

 

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