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According to Foresight News, Circle's EU Strategic Policy Director, Patrick Hansen, has confirmed that the European Union has not banned self-hosted cryptocurrency wallets or trading. There is no such prohibition in place. However, using non-KYC self-hosted wallets for encrypted payments, such as to merchants, will be more difficult, depending on the merchant's setup.
Previously, comments made by a member of the European Parliament were misinterpreted when confirming the approval of new EU anti-money laundering regulations (AMLR).