EU discusses preventing minor terror financing: exchanges need to verify transactions below 1,000 euros

European legislators are considering new laws that would require different levels of verification for transactions above and below 1,000 euros. A report by The Wall Street Journal earlier stated that "Hamas-related cryptocurrency wallets received $41 million," which apparently has left a deep impression on legislators worldwide.

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Additional Verification Required for Cryptocurrency Transactions Below €1,000

DL News cited a leaked European Union draft indicating that EU legislators may require cryptocurrency exchanges to perform additional verification for transactions below €1,000.

If the cryptocurrency transfer exceeds €1,000, exchanges would need to conduct further checks on users, such as understanding the relationship between the parties involved in the transaction.

There is currently no consensus among legislators regarding the proposal.

Targeting Terrorist Financing

According to EU officials, the rationale behind the proposal is to prevent terrorist financing, especially scenarios where funds are dispersed in multiple small transactions to avoid detection, rather than through large transfers.

Damien Carême, a French legislator from the European Parliament's Green Party and the lead negotiator on anti-money laundering frameworks, told DL News:

"The parliament mentioned the tension in the Middle East in discussions related to cryptocurrency. We support the idea, but we need more data and proportionality on this measure of additional KYC."

Kristin Smith, CEO of the Blockchain Association, countered this notion to DL News:

"There is a gap between the role digital assets play in the global financial system and the 'assumptions'."

Significant Impact of WSJ Report

Previously, The Wall Street Journal reported "Hamas-Linked Crypto Wallets Received $41 Million," which not only reinforced negative perceptions of cryptocurrency among the public but also heightened potential regulatory pressures.

The report sparked widespread discussion, with the data source Elliptic, cited in the article, clarifying that The Wall Street Journal distorted the data by categorizing all cryptocurrency transfers as donations.

Chainalysis also issued a special report to correct the misinterpretation.

Cryptocurrency Terrorism Financing Controversy: Chainalysis Warns of Exaggeration and Misunderstanding

DL News concluded that EU legislators aim to reach an agreement by the end of the year, which would require approval through a full parliament vote and formal signing by EU member state ministers in the Council to become law.