The European Union is set to crack down on anonymous Bitcoin trades. In a press release issued this week, the European Commission announced a move to strengthen transparency rules in order to better combat terrorism, terror financing, and money laundering.
According to the statement, this includes “ending anonymity” for virtual currency exchanges:
“Tackling terrorist financing risks linked to virtual currencies: to prevent misuse of virtual currencies for money laundering and terrorist financing purposes, the Commission proposes to bring virtual currency exchange platforms and custodian wallet providers under the scope of the Anti-Money Laundering Directive. These entities will have to apply customer due diligence controls when exchanging virtual for real currencies, ending the anonymity associated with such exchanges.”
According to Robert Genito, whose private peer-to-peer Bitcoin exchange Wall of Coins operates in several European countries, this move is not a productive use of European resources.
Genito says:
“The EU putting energy into preventing Bitcoin would be a pretty foolish move. I'm sure they have bigger problems to address.”
Regulations specifically affect fiat-to-cryptocurrency exchanges
The new regulations would not likely affect normal business transactions, but would instead bring exchanges that trade cryptocurrency with fiat under increasing surveillance and regulation, disallowing them from protecting their customers’ identity.
Fran Strajnar, Founder & CEO of Bravenewcoin, sees a possibility for some exchanges to be affected. However he sees a bright side of businesses affected by new regulations giving way to new, more resilient permutations.
He says:
"The newly adopted EU rules suggest to treat virtual currency exchanges operators (specifically exchanges and wallet type services offering a Fiat to Digital Currency exchange, not Digital to Digital exchange) the same way conventional money services are treated under established counter-terrorism, AML & KYC guidelines. It is unclear if operators like LocalBitcoins will be effected but it is likely the case. The result if LocalBitcoins are affected will be similar to when Napster was shut down - a Decentralized version will quickly emerge which cannot be taken down. I would hope regulators accommodate for innovative services like LocalBitcoins so we don't kill innovation for the illusion of security"
Did the UK vote to leave the EU just in time?
These new regulations would only affect European Union member states. Thankfully for the future of the British cryptocurrency economy, the UK voted to leave the EU last month. This triggered a spike in the price of Bitcoin, and has led to speculation of a possible EU disintegration.
With Bitcoin joining gold as a good hedge investment in uncertain times, the future looks bright for cryptocurrency.