Is the Bitcoin Lightning Network restricted in Europe?

Hey everyone, I tried to take out some BTC using the Lightning Network on Binance, but I can't find that option. So, I reached out to Binance support, and they told me that as an EU citizen, I can't withdraw or deposit using LN. Apparently, new EU rules have put a stop to LN on exchanges like Binance and Coinbase. They've also banned other cryptos like XMR and DASH. From what I got from Binance support, the EU is worried about LN because its transactions are hard to trace. Now I'm left wondering if I can even use LN in Europe at all, given that I can't do anything with it on exchanges. Does anyone know if I can still use the Bitcoin Lightning Network with wallets that support it? Am I at risk of getting in trouble for using it? Sure, there are other altcoins with lower fees, but Bitcoin is king in the crypto world. The LN lets us spend Bitcoin easily in daily life. I can grab a coffee instantly with almost no fees, and the transaction gets confirmed right away. I like to think of it this way: Bitcoin is like your bank balance and statements, while Bitcoin Lightning Network transactions are more like cash, untraceable and private. If they ban the LN, does that mean cash should be banned too? As far as I know, right now, only financial institutions in the EU can’t use XMR, DASH, and other privacy coins. Individual users can still use them as long as they aren’t dealing with the financial system.

I can buy a beer with LN, so no, it's not banned. Don't trust Binance, they'll try to trick you into accepting their own made up tokens instead of Bitcoin. They have no interest in letting you withdraw real Bitcoin.

Thank you for your quick replies. It's clear for me now that I can freely transact through the Bitcoin Lightning Network being an EU citizen. This is unrelated to the question but anyways: Are there any ways I can buy Bitcoin and withdraw it into a LN wallet/address directly? (avoiding the transaction fees two times between CEX -> wallet -> LN and then back to LN -> wallet -> CEX) I have been navigating several DEX but unfortunately I couldn't find any that would transact in the Lightning network. If financial institutions, which include CEX, are prohibited from using XMR, DASH or transacting in the LN. How is an individual supposed to access these crypto assets? (open question - I'm not currently looking forward to acquire any of these - curious about the legal aspect) Thanks for your comment - I'm glad you can buy beer with LN   For now, Binance is my main CEX (in the past I've also used Coinbase) - looking forward to learn more about the alternatives

Kraken allows LN withdrawals. Or withdraw a low fee altcoin and go though an instant exchange to get LN.

You are right, just checked and I'm able to deposit/withdraw LN. What do you mean by: go through an instant exchange? Adding something else: Why is Kraken allowing LN transactions in Europe if it’s a financial institution? Is it not complying with the latest regulations? [moderator's note: consecutive posts merged]

You can buy privacy coins (XMR, DASH, etc.) from centralized exchanges that are outside of EU. Some of these exchanges don't even require KYC, so they essentially ignore the EU limitations. Even if the exchange requires KYC but does not have a legal presence in EU, it can ignore the EU limitations. And there are also decentralized exchanges which completely ignore this limitation. EU prohibits financial institutions from working with privacy coins like XMR, but I am not sure if they prohibit the LN transactions. It could be that Binance is overly strict with LN because they are having legal troubles in US and EU and they want to stay on the safe side.

I'm glad because I had seen the title and thought things in terms of LN were going faster than expected. Just in case I have searched and I don't see anything about it so it looks like a one-off problem with Binance, as has been commented. In this article from last year they talk about possible problems but not so much to prohibit as to force KYC transactions.: Bitcoin Lightning Network at regulatory risk after Tornado Cash saga

Binance is garbage after that, I haven’t used it for several years https://bitcointalk.org/index.php?topic=5439961.msg63202131#msg63202131 Save this link and trade freely in Monero, Bitcoin and use LN and do not use centralized dumps that will fulfill all the requirements of your governments. https://archive.ph/CpS0W   And most importantly, talk less about what you do with your friends.

Exchange alt to bitcoin to use with LN across Europe. If you want to withdraw via LN like Binance, find here for DEX, instant btc><alts exchange that supports bitcoin LN. https://cointastical.github.io/Exchanges-With-LN/ I don't think European regulations can prevent you from withdrawing Bitcoin LN via DEX.

Not only state laws cannot stop decentralized exchanges, and I cannot judge whether this is prohibited or not. Europe has very strict tax laws, and a problem arises when legalizing cryptocurrencies, because decentralized exchanges do not provide documents on trading. Therefore, for the tax authorities, all cryptocurrency will be considered net profit when calculating fines.

First thing, there is no such law, nobody is banning the sale of those coins it just asking the exchange to collect the information about the buyers, which they already do. Anther example of Binance getting it all wrong: https://cointelegraph.com/news/binance-wrong-monero-zcash-privacy-coins Second, it would work just as you can get a some Foie-Gras from in Germany, you buy it from some guy France In this case you buy it from somebody else, it's just that if financial institution will eventually not be allowed to sell them to you, there is no proposed ban on private dealing whatsoever, and even that ban on privacy coins is not enforceable yet either. Can you link to such directive?

These are only amendments to the law and proposals EBA consults on amendments to the Guidelines on money laundering and terrorist financing risk factors to include crypto-asset service providers https://www.eba.europa.eu/eba-consults-amendments-guidelines-money-laundering-and-terrorist-financing-risk-factors-include Governments believe that confidential coins pose a high risk of being used in criminal activities and other crimes such as terrorist financing. Comments and public hearings are closed. If you are from Europe, please tell us what will happen next with this bill.

Care to link to such amendment? An amendment to a law should be public just as a proposal. And the amendment of banning privacy coins in Europe is....where? There is no such bill, all crypto regulations are part of MICA, and MICA is not addressing personal or non financial business, it's only targeting  crypto-asset service providers. So the whole thing about the EU banning LN is just crazy talk. Restricting CASP from dealing with privacy coins in financial truncations with companies that are either not regulated in the EU or aren't complying with AML/FATF rules that's a different thing.

It is a draft so it is not public yet, but there is leaked information https://www.coindesk.com/policy/2022/11/15/privacy-enhancing-crypto-coins-could-be-banned-under-leaked-eu-plans/

So we went from: to a leak of a draft and while they aren't even capable of showing a paragraph from it, the article is full of: "could ban", "would represent", a mysterious diplomat, "the diplomat, who spoke on the condition of anonymity", and so on.. How is that possible that only Coindesk is reporting on this and not any other paper? Oh wait, was this because that draft was leaked out a year ago and we still have seen nothing of it, meaning it was another made up story?

In my opinion, the MICA law regulates cryptocurrencies very little and it will be supplemented. Major Bitcoin Lightning wallet provider quits US market https://www.theblock.co/post/264585/wallet-of-satoshi-bitcoin-lightning "Wallet of Satoshi has removed itself from the U.S. Apple and Google app stores, confirming it will not serve customers in the country going forward. The popular Bitcoin Lightning app did not specify the reason for the decision but sought to assure existing customers in the U.S. that their funds were safe and available to transfer to another wallet." This is bad news, and the company is apparently afraid of regulation in the US. Do you think that Europe will not regulate the Lightning Ecosystem yet?

https://protos.com/bitcoin-lightning-network-users-could-have-lost-millions-in-jamming-attack/ "In December 2022, Bitcoin’s most popular scaling solution, the Lightning Network, experienced a critical vulnerability error. Had a hacker exploited this error, many users could have lost their bitcoin. For context, there are thousands of users and at least 5,500 bitcoin worth at least $150 million in the Lightning Network." ___ I would first ask other questions about the reliability of this ecosystem and how many bugs are still present there, but undetected. This ecosystem is not popular everywhere and is not yet suitable for the massadoption.

It has nothing to do with LN. The thing everyone fails to mention here is that it wasn't just a lighting wallet, you could also buy coins with cash without kyc directly from the wallet, that was their money maker move, if they wouldn't have had  that they could have just left the wallet alone free in the wild, after all it's just a piece of software, right? But saying that out loud would hurt their image, right? They don't care about LN and they won't! First any amendments major to MICA would need again all the legal steps and since it's an general financial regulation it would need this time not just an majority in the EU parliament and Council but it will require all those to go through the Commission, and here each country had a veto right. Second, why would they care, the law covers the entry point and the exit point of LN, since no financial institution that deals with fiat can have its business only on LN, it makes little sense to have it targeted once the gateway is regulated.

Thanks for the answer. I did not manage to study the entire MICA law, but I am sure from my own experience that one law is not enough. In my country, questions always arise when using laws, which is why instructions, recommendations, clarifications, methodological instructions, and so on appear. One law becomes the reason for many regulatory documents, and after a couple of years of work, judicial practice is added. So, will all additional documents be done centrally or is the law so ideal that this will not be required? Or will each country have its own views on controversial issues?

if you really need the bitcoin I would suggest you withdraw it with regular bitcoin transactions like through legacy address and segwit address. and start moving your fund or keep it your fund that has access to lightning network withdrawal even tho that is in the EU region. Besides that, I just did a quick Google search and didn't find that the EU is banning the Lightning Network.