The European Union has renewed calls for stricter cryptocurrency regulations.
Europe is one of the most prolific markets for cryptocurrencies and cryptocurrency technology-based products and services. The proposal for the amendment of existing Directive (EU) 2015/849 believes that Bitcoin exchanges, due to lack of strict controls may become a potential route for money transfer among terrorist groups and organizations.
In order to prevent misuse of virtual currency platforms, the EU proposal requires the existing AML and CFT norms currently applicable for conventional financial machinery to be extended to cryptocurrency exchanges and wallet service providers. If implemented, the new proposal will increase oversight on crypto exchanges by allowing component authorities to monitor all transactions handled by the European players.
In what sounds like a potential invasion of privacy, the EU proposal also suggests empowering Financial Intelligence Units to request identifying and personal information of people associated with any cryptocurrency wallet on these Bitcoin and other cryptocurrency exchanges. By making such allowances, the council believes that it will be able to tackle the issues related to anonymity associated with cryptocurrencies.
In spite of drawing parallels between fiat and cryptocurrencies in regulatory perspective, the council refuses to offer the legal tender status to the latter. The proposal doesn’t bring anything new to the table. The arguments presented in the document is same as many other in the past. There is, however, one small distinction, the EU proposal explicitly states that complementary currencies (localized, community-based alternative currency forms) are exempt from these proposals and they can’t be considered as virtual currencies.
Still subject to approval, the EU proposal for amendment of existing AML and CFT may not be implemented in its current form. But still, the final version is still expected to take a tough stance against Bitcoin and Bitcoin-based platforms. This will increase the operating costs of European exchanges, which may decide to pass it on to its customers in the form of higher processing fee.
Ref: Europa | Image: Shutterstock