Digital Currency Regulation Heats Up In The EU As Parliament Proposes Additional Rules – Featured Bitcoin News


Digital Currency Regulation Heats Up In The EU As Parliament Proposes Additional Rules

Europe is seeking to further tighten its grip on digital currencies including bitcoin. Previously, the European Commission has only proposed strict rules for digital currency exchange platforms and custodian wallet providers. Last week, the European Parliament proposed additional amendments meant to regulate digital currency businesses, adding a multitude of business categories, specifically disallowing anonymity.

Also read: Europe Committed to Tightening Digital Currency Rules by End of 2017

EU Legislative Process

Digital Currency Regulation Heats Up In The EU As Parliament Proposes Additional RulesThe European Commission has already published its proposal to amend ‘Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing’ to include digital currencies including bitcoin last July.

The next step of the EU legislative procedure is for the European Parliament to either adopt the Commission’s proposal or amend it. In this case, the Parliament chose to amend. Therefore, on Thursday, a report was published outlining their amendments to what the Commission proposed.

EU to Regulate Most Digital Currency Businesses

While the Commission only proposed extending the scope of Directive (EU) 2015/849 to include virtual currency exchange platforms and custodian wallet providers, the European Parliament’s proposal seeks to include much more.

Like exchanges and wallet providers, the Parliament claims that many other types of businesses are under no obligation to identify suspicious activity. “Terrorist groups are thus able to transfer money into the Union’s financial system or within virtual currency networks by concealing transfers or by benefiting from a certain degree of anonymity on those platforms”, the Parliament wrote, noting that:

It is therefore essential to extend the scope of Directive (EU) 2015/849 so as to include virtual currency exchange platforms, custodian wallet providers, issuers, administrators, intermediaries and distributors of virtual currencies, and administrators and providers of systems for online payments. Competent authorities should be able to monitor the use of virtual currencies in order to identify suspicious activities.

The Parliament then proposes that all Member States shall ensure that all businesses falling into the above categories “are licensed or registered”.

“This would provide a balanced and proportional approach, at the same time safeguarding both the innovative technical advances offered by such currencies and the high degree of transparency attained in the field of alternative finance and social entrepreneurship”, the Parliament claims, adding that:

To combat the risks related to the anonymity, virtual currencies should not be anonymous and national Financial Intelligence Units (FIUs) should be able to associate virtual currency addresses to the identity of the owner of virtual currencies.

Modifying Digital Currency-Related Definitions

The Parliament also redefines digital currencies at the suggestion of the Digital Currency Regulation Heats Up In The EU As Parliament Proposes Additional RulesEuropean Central Bank which said that the Commission’s “definition of virtual currency needs improving”.

There is now a clause stating that digital currencies do “not possess a legal status of currency or money”. In addition, the proposal adds the definition of a “custodian wallet provider” which was previously not defined.

A custodian wallet provider now “means an entity that provides services to safeguard private cryptographic keys on behalf of their customers, to holding, store and transfer virtual currencies”. In addition, the parliament has added a new line to the definition which reads:

Virtual currencies cannot be anonymous.

What do you think of the European Parliament’s amendments? Let us know in the comments section below.

Images courtesy of Shutterstock and European Parliament

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Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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