European Union has been an ardent supporter of cryptocurrencies and has even proclaimed that they would be interested in formulating cryptocurrency of their own. The move was a preemptive measure to catch up with the developments in the fintech sector and also bank on the advantages of cryptocurrencies in modern Financial services domain. However, EU has decided to take some harsh steps to combat terrorism which includes banning of transactions greater a particular value that is subjective to the country. This way they would be able to ensure that terrorism funding is put on hold as they would be able to track online transactions.
This has eventually led us to the point where EU has started considering possible ways to regulate Bitcoin transactions. The plot thickens as this would mean identifying Bitcoin users, tracking transactions and doing away with anonymity. Let’s look into the details of how EU is planning to pursue the project:
The twist in the story:
The European Commission published the directive to monitor transactions and promote cashless transactions last July. The proposal has come up for review and the parliament had two options:
- To accept and approve the proposal
- To push for amendments that would fit the case better
In an interesting turn of events, the parliament went for an amendment to include Bitcoin and cryptocurrency wallets in the purview of the directive.
Regulating Digital Currency Businesses:
This move would mean the focus would shift on Bitcoin and cryptocurrency wallet companies and would essentially require the commission to monitor the transactions at the expense of anonymity. This was evident from the parliament’s quote about their decision:
“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”
However the positive aspect of the entire exchange was that the parliament is cognizant how regulations would affect the cryptocurrencies and are prepared to take a balanced approach towards the digital asset class.
After the Paris attacks in 2015 and incidents where the assailant demanded the ransom in Bitcoin, EU government has become very proactive in monitoring illicit activities that are facilitated through Bitcoin. Following the survellaince, Europol released a report in which it explicitly stated that there was no evidence found linking terrorist activities to Bitcoin financing. Nonetheless, EU is clearly bent on tracking assets through cryptocurrency and end the privilege of anonymity that the currencies offer. Growing acts of terrorism have been given as a prime reason for the decision.