EU wants to identify bitcoin users

Regulation | January 2, 2017 By:

The European Parliament and the Council of the European Union have proposed the amendment of existing Directive (EU) 2015/849.

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.

The directive constitutes the main legal instrument to prevent the EU financial system from being used for money laundering and terrorist financing. The directive, to be transposed by June 26, 2017, establishes a framework to require member states to identify and mitigate risks related to money laundering and terrorist financing.

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.