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The European Commission has proposed a law that would force companies that engage in Bitcoin transactions and transfers within the EU to collect the identities of senders and receivers. Under this law Bitcoin transactions from companies would then become know-your-customer (KYC) compliant and traceable. Wire transfers are already subject to this regulation under what is called the “travel rule.” The proposal comes after a recommendation by the Financial Action Task Force.

The commission stated: "Today’s amendments will ensure full traceability of crypto-asset transfers, such as bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing.” This rule will make it illegal to provide pseudonymous bitcoin wallets within the EU.

The European Commission also commented that although this effort was made in order to address unspecified threats, presumably of money laundering, at the same time it didn’t intend to create an “​​excessive regulatory burden on the industry.” Despite this comment, under this regulation anyone sending bitcoin would be required to give their name, address, date of birth and account number to their service provider. The service provider of the receiver of a bitcoin transfer would be responsible for tracking all of the recipient’s information.

It is unclear whether the European manufacturers of pseudonymous wallets, such as Ledger (Paris) and Trezor (Prague), would continue to export pseudonymous wallets, or whether they will KYC their wallets only within the EU.

Fortunately, the European Parliament and the EU states still get the final say on this intrusive, anti-privacy amendment, meaning Trezor and Ledger may be able to continue to make pseudonymous wallets in Europe for the next two years before the law comes into effect.