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With respect, since the introduction of AML5, art dealers and auction houses are subject to KYC/AML requirements (as so-called "high value dealers"). If the transactions exceeded €10,000, the company would be obliged to be compliant or, as many do, hire a dealer who is compliant to act on their behalf.

chrismcb 1435 days ago

But why? I realize that there is an arbitrary 10000 number that governments use to spy on it's people. But why? Why should the people follow these insane rules? In the us this is potentially unconstitutional unless it is interstate trade.

I am not a fan of the ever increasing state surveillance of private transactions, so don't expect a justification from me.

Presumably €10,000 is the trade-off value which the member states decided would be sufficient to make an impact on money laundering without imposing too much bureaucracy on small transactions.

> Why should the people follow these insane rules?

I don't necessary like them, but AML 4/5/6 are well-reasoned Directives that were written and negotiated in public and agreed on by all member states. They didn't receive much pushback during their drafting periods. If anything, leaks like the Panama Papers have made them popular.

As for why people should follow the law, that should be obvious. The state won't leave you alone to transact as you wish. Compliance failures lead to civil and criminal sanctions.

> In the us this is potentially unconstitutional unless it is interstate trade.

Fortunately, the EU is not in the US.

This is not fundamentally possible in peer to peer permissionless blockchains. The law as it is currently defined is not compatible with the technology and will need to be revised if the law wishes to consider NFT as high value art sale.

> This is not fundamentally possible in peer to peer permissionless blockchains.

That's nonsense. There's nothing preventing KYC for any business transaction. It won't happen on the blockchain, but entities operating in the EU who forgo compliance will end up subject to investigation when they interact with the financial system, as may have happened in this case (again, I'm not supposing that the OP did anything wrong).

> The law as it is currently defined is not compatible with the technology and will need to be revised if the law wishes to consider NFT as high value art sale.

This is complete nonsense. The medium of transaction is neither inherently compatible or incompatible with the law, and entities which try to use it as an excuse to avoid their compliance obligations will find themselves subject to government investigation and sanction.

The idea that you can pretend that a technical implementation can exempt you the law is so outlandish and absurd that I wonder if you're trolling?

I am not saying KYC is not possible - I am saying the requirement that the seller does KYC - such as an invoice with customer details - on every transaction is not possible. Once an NFT is listed for sale through a permissionless contract, there is no way the seller can block a particular buyer, or demand an invoice or their private details before or after the sale. The buyer's tokens may have originated from a KYC-d exchange such as Coinbase or Kraken, but that information is not available to the NFT seller, and this is where the problem is with the OP website.

> The idea that you can pretend that a technical implementation can exempt you the law is so outlandish and absurd that I wonder if you're trolling?

I am not suggesting this exempts anybody from the law, I am suggesting the law is outdated and not compatible with current technology. If the law is that you must handle KYC upon receiving $10K USD in tokens, and an anonymous wallet sends you 10ETH in tokens, you should not automatically become a criminal and have your assets seized because of a law that was written before permissionless blockchain networks existed.

malfist 1435 days ago

Designing something that breaks the law, does not mean you don't have to enforce the law, or that the law needs to be updated and "made compatible"

If I sold a car that was deliberately unsafe, I wouldn't expect people to come to my company's defense and say that being safe in my car isn't possible and therefor the law is outdated and not compatible with current technology.

Laws change as society and technology advances. If your argument is that every permissionless NFT sale is illegal and criminal because it cannot be KYC’d, my argument is that this law is dumb and needs to be rewritten given that many people and companies are now exploring NFTs as legal and taxed income, and most celebrities and companies selling NFTs in the last two years are not going through the same hardships as the OP.

What you are describing is the use of permissionless contracts to avoid AML/KYC compliance law, which is partly what the Directives are designed to criminalise.

> I am not suggesting this exempts anybody from the law, I am suggesting the law is outdated and not compatible with current technology.

AML 5 came into law on the 10th January 2020 (with an enforcement window for transposition into national laws). The law is, as said before, partly designed to close loopholes in the previous Directives that allow high-values transactions to avoid regulation. The law is - for better or worse - keeping up to date. It's simply the case that you don't like the regulation being imposed.

> If the law is that you must handle KYC for > 10ETH purchase, and an anonymous wallet sends you 10ETH in tokens, you should not automatically become a criminal and have your assets seized because of a law that was written before permissionless blockchain networks existed.

I think this really puts your bias front and centre.

> What you are describing is the use of permissionless contracts to avoid AML/KYC compliance law, which is partly what the Directives are designed to criminalise.

The goal of this is not to avoid the KYC laws. Unfortunately the technology makes it impossible to comply with them as the laws do not account for permissionless smart contract functionality.

Many artists and corporations are now selling NFTs without the ability to get KYC on every transaction, because this data does not exist on the blockchain and cannot be acquired unless you are a legal authority that has the ability to request private data from a CEX. Saying it “must” be acquired for 10K+ transfers is basically saying those transfers must be criminalized.

NFT sales were not on anybody’s radar before 2021, especially not EU lawmakers. In the next few years it seems likely there will be more regulatory clarity so that people can make taxable income on NFTs without being treated as criminals as in the OP case.

> I think this really puts your bias front and centre.

How so? It is clear to me this law is not compatible with the way the blockchain works and the OP being criminalized for selling art is a good example of how it will hurt regular citizens. Meanwhile corporations and brands selling NFTs probably will be fine as they have larger legal teams and regulators are less likely to try and fight them.

The solution to this AML law is either to treat all these blockchain transactions as illegal and continue to criminalize the behaviour, as you are suggesting, or to define new laws that take into consideration the way that blockchain transactions do not allow sellers to request KYC, and instead push that AML reporting requirement on the CEXes.

gizmo 1435 days ago

As a business you have to issue invoices and you also have a responsibility to stop obviously criminal behavior.

A car dealership can’t sell somebody a Lamborghini if they want to pay with crumpled $20 notes. An art dealer can’t buy a Mondrian that the seller claims they found in their granny’s attic.

I don’t understand how this is controversial.

etrautmann 1435 days ago

Neither of your examples seem obvious or objectively criminal, or uncontroversial for that matter. If you pull back from Lambo to a Civic, is this still obviously criminal?

classifying suspicious transactions is a weird and dangerous path to legislate.

fragmede 1435 days ago

Except that we're already there.

Domestically, cash above $10k is already subject to a reporting requirement, a new Honda Civic is $22k, and that much cash has been deemed suspicious due to the war on drugs.