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.

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  • Steve Van Blerk

    It’s not surprising. The cabal cannot afford to lose control via anonymity and will go all out to either regulate to their say so or totally ban bitcoin. Their ruse that it will be used by terrorists is absolute bullshit.

    • Sammi kao

      You need to think from their side. Any means they have they will use. BS or not the agenda from their side will try their best to alter the game for blockchain. The question is, how many option do they have? Yes calling it illegal is one, tax the exchanges is two. But that is about it.
      So what are the alternatives from blockchain developers to counter those attacks.

      If it goes illegal, decentralized exchanges will pop up like bitsquare in no time.
      If they tax exchanges or PoS dealing in BTC then retail mom and paps shops will goto silk road to avoid taxation.

      FIAT has met its match and it knows the printed paper can no longer hold its value forever.

  • Marco Maltese

    We will not submit.
    They will want more control, more anonymous methods of exchange will pop up.
    The more they tighten the screw, the more the IT infrastructure will become ghostly.

    • Sammi kao

      True. The main reason Dash is gaining ground. (I never owned DASH nor I am sponsoring it)

  • MC Kuky

    Just shows the monopoly they have on everything, which we need to fight against. Terrorist my ass… they existed long before digital currency and what did they do about it? Fucking nothing… in fact they even fund it themselves. US military is biggest terrorists organization in the world already.

  • Sadhaka Padma

    They trying scare people to use cryprocurrencies. Wont work….fiat is collapsing and people wont have choice only join revolutionary forces.

  • This can of regulations to have more control over the population. They will not beat cryptocurrencies, the more pressure they will make, the more anonymous solutions will come into the market. We have the fundamental right to control our money and not get poorer every year because they print more shitty paper money.

  • Dog

    hey dickheads if you want to stop terrorism look to what the USA is doing (aka control your borders!!) … we don’t want to have to come back over to Europe yet again in a 100 yrs and save your asses. We’ve already saved you from the Kaiser, from the Nazis and from the USSR making you all their slaves…

  • Alec

    I find that regulating the overlap between the Virtual Currencies (VC) and Fiat Currencies is a good idea, i.e., VC Exchanges. This is basically “Do whatever you want in the network, but when you exchange from VC to EUR, please give us some info”. This will give businesses a certain degree of security so that they can start using VC in their businesses, meaning that VC developers will be able to capitalise from their products/skills. It’s a win/win situation for the VC community and the EU.

    Also, don’t forget that the core principle of a distributed network like Bitcoin is transparency. The more there is of it, the more we can trust each other