Cryptocurrencies provide an exciting and easy way to carry out financial transactions, due to their ability to offer cheaper money transfers, speed, pseudo-anonymity, and the elimination of third-party interference.
EU Regulates Cryptocurrencies
While many Bitcoin skeptics have condemned cryptocurrencies in recent times, citing the fact that gangsters, terrorists and drug lords have used cryptocurrencies to aid their illegal activities, the price of the digital currency and by extension alt-coins have been steadily rising over the years. At press time, the price of bitcoin is at $19,519, with a market cap of over $300 billion.
The European Union has placed stricter rules and regulations to govern crypto exchanges and Fintech companies in Europe. The idea of banning cryptocurrencies outright flies in the face of the positive innovations the promising technology has introduced.
Ultimately, the EU hopes to weed out the handful of bad actors in the space, or at least reduce their ability to manipulate digital money in their favor. Specifically, these new rules will go a long way in expelling criminals who engage in acts of money laundering and terrorism funded by cryptocurrency.
In practice, this will revolve around a handful of guidelines that provide greater transparency in the sector. For one, crypto exchanges must conduct correct KYC (Know Your Customer) operations to identify and document all entrees to the marketplace. Companies must also adhere to higher standards of transparency and be prepared to unveil themselves to government bodies.
The most significant clause of these updated regulations is the ability for federal investigators to access information provided by major crypto firms.
The new regulations clauses have been well received by some in the cryptocurrency and government ecosystem while others expressed their reservations.
According to Reuters, Europe’s Justice Commissioner, Vero Jourova said, “Today’s agreement will bring more transparency to improve the prevention of money laundering and to cut off terrorist financing.”
Transparency international also applauded the development but noted that some limitations still exist. The rights group hinted that it is essential for members of the public to have access to information about beneficiaries of trusts and similar arrangements.
In another development, European Union lawmaker Dutch Green Judith Sargentini has made it known that some EU member nations have opposed the new regulations citing concerns the rules might adversely affect their countries economies.
Sargentini declared that countries like Britain, Malta, Cyprus, Luxembourg, and Ireland do not support the new development.
The Need For Change
The European Commission inspired these regulations, and the rules have been in the works since after the 2015 and 2016 Paris and Brussels terrorist attacks as investigators claim that bitcoin and other alt-coins were being used to fund terrorism.
The new EU Cryptocurrency rules also help in combating the menace of money laundering. All member states of the European Union and EU Legislators are expected to adopt these regulations, which will in turn formally establish the rules into laws in the next 18 months.