EU – new anti-money laundering laws for Bitcoin Exchanges and Wallets?

The European Commission has drafted a proposal to further regulate Bitcoin companies to prevent terrorist financing and money laundering.

In the wake of the recent terrorist attacks within the European Union on the one hand and the Panama Papers on the other, the European Commission has presented a draft that aims to change the current anti-money laundering and know your customer regulations. The draft aims to amend EU Directive 2015/849 and Directive 2009/101/EC. Both are EU directives which deal with the prevention of money laundering and terrorist financing.

Bitcoin news companies bear the brunt

The new law will put crypto exchanges and wallet providers under the new Anti-Money Laundering Act and the KYC regulations. In the near future, these Bitcoin news laws could be strengthened to force users of crypto currencies to identify themselves voluntarily. Various Bitcoin news platforms that sell debit cards will also fall under the new law.

With this draft, the Commission wants to create an error-free protection against money laundering and KYC regulations, which can enter into force in every member country without great effort. Bitcoin Exchanges and Wallet providers will then be obliged to implement all necessary anti-gender laundering and KYC regulations as prescribed. These Altcoin platforms will then be required by law to report suspicious transactions to the appropriate government.

Bitcoin formula technology gets away with it

So much for the negative consequences for Bitcoin formula. Blockchain companies have a reason to be pleased, however, as the document also stresses the importance of Bitcoin formula developments for companies and governments. Furthermore, it is emphasized that this draft should not have negative consequences for research in the context of Distributed Ledger Technology.

The draft presents some measures to make it difficult for terrorists to take advantage of certain loopholes in the current regulations. It also wants to increase the transparency of financial transactions for both individuals and corporations. According to the draft, activities such as cash payments, trade in cultural artefacts, the use of Bitcoin, other crypto currencies and anonymous debit cards are possibilities to finance terrorism.

The European Commission has prepared this document together with various stakeholders within the EU. EU member states, representatives of the European Parliament, representatives of traditional payment systems, crypto exchanges, wallet providers, other representatives of the crypto currency community, stakeholders of the banking sector and representatives of Fintech companies, financial intelligence units such as the BKA, the European Data Protection Supervisors and various organisations representing consumers were interviewed prior to the draft.

Since the attacks in Paris, some EU member states have called for stricter regulation of crypto currencies. So the current draft does not come as a surprise. Nevertheless, the consequences for the Bitcoin industry should be kept in mind.
The document in its entirety can be read here.

Comment by the author (Philipp Giese):

To me this draft, especially if one wants to justify it with the acts of violence of the last days, seems to be similar to the other big proposals of the brand „stricter regulation regarding killer games“. In the end, it misses the point. Finally, interesting is the benevolent attitude regarding blockchain technology and DLT, which cuts into the classic „Bitcoin no, DLT yes“ notch.