European Commission considering transaction limits on virtual currencies

The European Commission has released an Inception Impact Assessment [PDF] considering a limit on cash transactions in a move that may also affect virtual currency payments.

According to an impact assessment published by the Commission, the aim of the proposal is to curtail payments in cash, which critics say promotes anonymity when transacting. Any restrictions, the roadmap states, “would be a mean to fight criminal activities entailing large payment transactions in cash by organised criminal networks” – with a similar impact on terrorist financing as well.

Considering recent technological developments around virtual currencies such as bitcoin the EC is considering an option to extend restrictions to cash payments to all payments ensuring anonymity, which includes virtual currencies and payments in kind.

The amendments to the Anti-Money Laundering Directive (AML) shares the Action Plan’s objective. Therefore, any measure that limits cash payments would be complementary to the actions addressed by the review of the AML Directive targeting risks posed through virtual currencies and prepaid instruments.

As part of its mission to bring an end to the anonymity associated with digital currency transactions, the EC proposed stricter rules in July for the use of digital currencies targeting amendments to the 2015 Fourth Anti-Money Laundering Directive.