A directive affecting the crypto sector in Europe was adopted by the EU Council. The document adds to anti-money laundering legislation, allowing the Union to solve, among other issues, "the risks associated with virtual coins". The new rules aim to reduce anonymity for both users and transactions with client knowledge procedures that crypto platforms will need to implement. Meanwhile, a senior European Bank official has called for the segregation of crypto business by traditional finances.
Authorities will monitor the use of cryptocurrency
"Strengthening European Union rules to prevent money laundering and terrorist financing" is the stated goal for the changes adopted as part of an "action plan" launched after the terrorist attacks in Europe in 2016. The new directive plans to "stop the financing of terrorism without interfering in any way with the normal functioning of payment systems ", according to the Council press service. Amendments to EU Directive 2015/849 of the European Parliament and of the Council of 20 May 2015 were adopted at a meeting of the General Affairs Council on Monday, without discussion. The move comes after an agreement with the European Parliament in December 2017. In April this year, the MEP showed its support by voting to bring the cryptomonas under stricter regulation.
The main change involves solving the risks associated with virtual coins, taking steps to reduce anonymity for both crypto traders and businesses related to the crypto market in the sea. According to the text, virtual exchange and virtual exchange service providers, as well as custodian wallet providers, will be required to identify suspect activities. The directive says authorities should be able to monitor the use of crypto on these platforms. National Financial Information Units should have access to information that will allow them to associate cryptos addresses with the identities of their owners.
The project's authors acknowledge that the measures in the document do not entirely solve the problem of anonymity. The measures should be detailed by the Member States, who have 18 months to transpose the Directive into their own national legislative framework. Once that happens, crypto shifts across the EU will be subject to stricter anti-money laundering and anti-terrorist financing regulations, including by thoroughly verifying customer data on the platform.
Some companies have already acted in this regard. Localbitcoins, the peer-to-peer exchange in Helsinki, has recently updated its Terms and Conditions. They acknowledged that the changes were introduced mainly due to EU regulations. They highlighted the identification requirements and warned users that in some situations, such as transactions over certain volume limits, or in the case of fraud, hacking / recovery investigations, they would have to send identification documents. The new set of terms will come into effect already this month.
Virtual coins-definition
The EU Council says "virtual coins should not be confused with electronic money." Their directive shows that although crypto can be used as a payment method, they also serve other purposes and have other wider applicability. Among them, they listed exchanges, investments and stockpiling.
It came with a definition of virtual coins, that of "digital value representation that is not issued or guaranteed by central banks or public authorities." The Directive also notes that digital coins are not legally legally attached and do not have legal tender status but are accepted by natural or legal persons as an exchange method. Crypto can be transferred, stored and transacted electronically, says the text of the directive.
European institutions have identified wallet providers as "entities that secure private cryptographic passwords on behalf of their clients to store, store and transfer virtual coins." According to the legal document, national authorities should ensure that they are authorized and licensed together with exchange service providers.
The directive also introduces changes to prepaid bank cards "to prevent terrorists from using this funding method." The bar for compulsory identification of the holders was reduced to 150 euros. Identity verification is also required for remote payments with transactions over € 50.
BEC officials want to "make a fence" around crypto businesses
Brussels seeks to reinforce the rules governing the crypto transactions. In Frankfurt it was suggested that all cripto businesses should be segregated from traditional finances. According to a Reuters report, a high representative of BEC said that banks should separate any virtual currency activities from other operations, or even support them with capital to mitigate the risks. Officials also require regulation of cryptocurrency and chip issuers, exchanges, and any bank or clearing houses that work with them.
"Because of the high volatility of virtual currencies, it may seem appropriate to ask any trading firm to support them with an adequate level of capital and to be segregated from other trading and investment activities," said Yves Mersch, member of the BEC commission, in a conference in Turkey on Monday.
He added that the crypto market is too small to endanger financial stability, but warned that this could change. Mersch added:
"We need to examine whether any virtual currency activity driven by the financial market infrastructure should be curtailed."
Your Post Has Been Featured on @Resteemable!
Feature any Steemit post using resteemit.com!
How It Works:
1. Take Any Steemit URL
2. Erase
https://3. Type
reGet Featured Instantly & Featured Posts are voted every 2.4hrs
Join the Curation Team Here | Vote Resteemable for Witness