So for the already KYC`d accounts there is no practical difference now and then !?
With this legislation,
every transaction you make via a centralized exchange is reported directly to the relevant authorities in your country. So I would expect a lot more cases of people having accounts locked or coins seized pending some nonsense investigation because some sketchy blockchain analysis has decided that you might be a criminal.
I understood the proposal a bit different: for
every transaction to an exchange/payment processor/other service provider you have to provide the identity of the sender, but only if the transaction is over 1000 € it must be reported automatically; however, the information must be transmitted to the authorities "upon request", and there are other cases where a report can or should be sent by the service provider (if it's suspicious to be linked to criminal activity). I agree however with the second part - definitively, there would be more cases of blocked/seized accounts.
I forgot if it already was linked here, but
this is the current draft proposal. I'm referring to article 16 (4a):
4 a. Where there is a transfer of crypto-assets from an unhosted wallet, the provider of crypto-asset transfers of the beneficiary shall collect and retain the information referred to in Article 14(1) and (2) from its customer, verify the accuracy of that information in accordance with paragraph 2 of this Article and Article 14(5), make such information available to competent authorities upon request, and ensure that the transfer of crypto-assets can be individually identified. For transfers of crypto-assets from unhosted wallets which are already verified and have a known originator, providers of crypto-asset transfers shall not be required to verify the information of the originator accompanying each transfer of crypto-assets.
The provider of crypto-asset transfers shall maintain a record of all transfers of crypto-assets from unhosted wallets and notify the competent authority of any customer having received an amount of EUR 1 000 or more from unhosted wallets.
To answer KevinMiles' question, I would say: For people who don't transact large quantities of crypto and already are KYCed, not much will change. But if you make a living with crypto, above all with trading, arbitrage and the like (which often will mean transacting large quantities) life will be more difficult and you should be very careful about segregating wallets and really evaluate thoroughly the services you use. For example, don't combine EU-regulated exchanges with small "unregulated" altcoin exchanges or DeFi apps; and if you want to use them, segregate regulated/unregulated funds strictly.
A point which came up in a discussion in the Spanish forum is the consequences for Lightning, which can have also problematic aspects. Private and non-commercial LN nodes should be safe, but for example EU exchanges which also are connected to Lightning (like Bitstamp) could have to restrict the node to their own customers (i.e. they could be used for deposits/withdrawals, but _not_ anymore for "supporting the network").