The EU Commission wants to tighten regulation of prepaid cards and virtual currencies (VC), according to Reuters. In response to the recent terrorist attack in Europe, the Commission intends to clampdown on anonymous transactions that may help fund such activities, promising to present its proposal by the end of June.
There seems to be a risk that virtual currencies may be used by terrorist organizations to conceal financial transactions, as these can be carried out more anonymously.
– EU Commission
EU Commission Seeks Tighter Regulations
Since the attacks on Paris digital currencies and the use of encryption has been targeted by the authorities for illicit behavior. The document seems to be in direct response to the attacks, and the Commission is looking to use surveillance measures on bank transfers within the EU. This includes the EU-US TFTP agreement in which the two governments share banking info between the two regions. The agreement is said to generate “significant intelligence that has helped detect terrorist plots and trace their authors.”
The report states that it will try and regulate cash and banking as much as the law will allow but it will begin its measures by monitoring virtual currencies and prepaid cards first. EU Commission Vice President Valdis Dombrovskis said:
We must cut off terrorists’ access to funds and enable authorities to better track financial flows to prevent devastating attacks such as those in Paris.
The EU Commission said that it will give its proposal by the end of June, and this could mean that users of cryptocurrency may have to identify themselves. An exchange operating in the region will have to collect user data to those trading digital currencies for a government tender. Prepaid cards will also need the buyer to provide identification at the local retailer selling the items. In November, the group was studying Bitcoin and other cryptocurrencies concerning terror sponsorship. They had given the public a press release called “European Agenda on Security – State of Play,” which also details the use of TFTP financial data framework. Two days later Reuters reported that the Commission was beginning its initial steps with virtual currency policy. Now it looks as though the organization wants to impose these regulations by the summer.
Cash is More Anonymous, Experts Tell EU Officials
Governments everywhere are stepping up to the task of regulating Bitcoin including Japan, China, the U.S., and more. The question posed by many is whether or not stricter rules which require data collection will stifle the industry by pushing away consumers. However, EU officials look to tighten up what they consider loose ends even giving a detailed explanation of what they see as positives and negatives with VC’s this month. The report titled “Virtual currencies: what are the risks and benefits?” asks the question of whether the technology is used by “criminals” to buy illegal goods. Issued by the European Parliament, the statement does imply the use of terrorism funding. However, two experts say that cash is far more anonymous than digital currencies like Bitcoin.
“In fact cash is likely to be a much more anonymous means of transferring value,” Sean Ennis, a senior economist from the OECD, explained. “The ownership string for virtual currency is public and that allows a tremendous amount of analysis of transactions.”
While the “war on cash” is unfolding in countries like Sweden and Denmark, German newspaper Spiegel just reported that the government is also considering banning all cash transaction of over 5,000 euros.
With the apparent attack on physical and virtual cash from all sides alongside the controversial TFTP agreement, an extensive debate on these draconian policies will determine just how these proposed regulations will play out. Whether the EU will face harsher regulatory action towards Bitcoin will be revealed this summer.
What do you think about the EU Commission’s regulation proposals? Let us know in the comments below.
Images courtesy of Crypto-graphics.com, Shutterstock, and Wiki Commons
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