The European Union legislators supported tighter crypto transaction safeguards on Thursday. The market quickly reacted, with the price Bitcoin falling more than 4% in the last day.
On Monday, the benchmark cryptocurrency reached $48,000, which was an impressive 9.3% increase from the previous days.
Bitcoin now has most of these gains back with its latest move.
According to data from CoinMarketCap, Bitcoin fell to $44,432 on Friday morning. However, it recovered slightly to $45,181 by press time.
The majority of major cryptocurrencies are also in the red, with the likes XRP and Cardano both (ADA), Terra and Polkadot all losing between 4.5% to 6% of their respective value.
Ethereum(ETH), currently the second-largest industry digital asset, is down 3.6%. It’s currently changing hands at $3275 per CoinMarketCap.
The only cryptocurrency that has remained in the green among the top ten is Solana, which is up 1.05% in the last 24 hours and trading at $125.34 as of press time.
EU cracks down non-custodial wallets
This latest dip could be due to recent news about the European Parliament’s vote to tighten regulation on crypto transactions.
The proposed proposal would require that crypto service providers such as regulated exchanges obtain and keep personally identifiable information from individuals who make transactions using unhosted or noncustodial crypto wallets.
“In the event of a transfer crypto-assets to or from a crypto wallet not held by third parties, known as an “unhosted wallet”, the EU Commission’s proposal text states that the crypto-asset service provider (or other obliged entity) should obtain and keep the required beneficiary and originator information from their customer, regardless of originator or beneficiary.
Non-custodial wallets don’t rely on third parties, and allow for direct transactions between users. MetaMask, and hardware wallets such as Ledger or Trezor are examples of non-custodial funds.
Initially, the Commission had proposed that the rule be applied to transactions exceeding EUR1,000 ($1,106). However, this “de minimis rule” was dropped under the cross-party parliamentary arrangement. Reuters reported.
Some prominent figures from the crypto industry have already criticised the results. Coinbase CEO Brian Armstrong stated that such an action “disproportionately punishes crypto holder and erodes their individual right in deeply concerning manners.”
Patrick Hansen, Head of Strategy for Decentralized Finance (DeFi), Unstoppable Finance, called this text a “recipe For Disaster” because it is only a matter time before “these personal data honeypots are hacked.”
Last month, the European Parliament’s Committee on Economic and Monetary Affairs passed Markets in Crypto Assets Regulations (MiCA) legislative packages, which aim to coordinate EU’s regulatory approach towards the crypto industry.
Legislators stated that one of the top priorities was to ensure that the EU’s financial regulatory framework is innovative and does not hinder the use of new technologies.