It’s old folk wisdom that you can’t escape the long arm of the law forever. In the case of BTC and other digital currencies, it seems that the very long arm of the European Union (EU) is about to wrap itself around them and squeeze.
On July 20, EU policymakers proposed that all companies that transfer BTC and other “crypto-assets” must collect details of the senders and recipients in an effort to crack down on crimes like money laundering, the transfer of illegal gains, and tax evasion.
The EU is notorious for having some of the toughest AML/KYC laws in the world. With a GDP of $15.1 trillion, a population of over 447 million people, and plans to launch a digital euro in the not-too-distant future, the EU certainly has the clout to set the standard for how other large nations and political blocs behave in the future.
What exactly is the EU proposing?
The European Commission proposed this amendment. It will apply the existing “travel rule” to digital currency transactions. This already applies to wire transfers in the EU and would make digital currency transactions traceable.
Leaving no doubt about its intentions, the Commission said, “Today’s amendments will ensure full traceability of crypto-asset transfers, such as Bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing.”
It will require companies involved in the transfer of crypto assets to collect the following information: name, address, date of birth, account number, and name of the recipient.
Providing anonymous digital currency wallets will be prohibited, as is already the case with anonymous bank accounts in the European Union.
It’s obvious that this will be the first in a long series of death blows to the anarchist fantasy of uncensorable, anonymous money that can be used to commit crimes with impunity. Bitcoin’s inventor Dr. Craig Wright has long been yelling from the rooftops about this, but it has largely fallen on deaf ears outside of the BSV enterprise blockchain community.
What do these regulations mean? Are they enforceable?
Is this the end of the digital currency industry in the EU? Definitely not. The Commission emphasized that it wishes to find the right balance between complying with international standards (note the word international in case you believe this will only happen in the EU) and not overburdening the industry with regulations. It stated that its intention was to help the EU crypto-asset industry develop.
Despite the protestations from some about what this means for BTC as uncensorable, anonymous money, the new regulations are both inevitable and likely a good thing. It’s just reality that large businesses like banks have to comply with KYC/AML laws, and as with many of the EU’s other industries, giving participants legal certainty and stamping out crime will help attract capital investment and should lead to faster innovation and development.
However, is the new rule enforceable? True to form, many crypto-anarchists believe not. Some took to social media to claim the EU would have to “ban math” to enforce the new rules.
Believing that the large companies and exchanges in the wider industry share their ideals, the initial reaction to this news even saw some claim that the EU’s new steps were oppressive and totalitarian in nature.
EU AIMS TO FURTHER ENCROACH ON YOUR RIGHTS AND LIBERTY IN AN EFFORT TO CONTROL YOUR LIFE EVEN MORE https://t.co/bB4DMWkYGo
— Ben Kaufman (@_benkaufman) July 20, 2021
Despite their dismay, it’s simply a fact that exchanges, large software developers, and miners/nodes within the EU will have to comply with these laws or risk being locked out of one of the world’s largest markets. Since they are all legally registered entities, they’ll be easy to find and shut down or block from operating in the EU if they don’t adapt and comply. It’s unlikely any of them will willingly lock themselves out of the EU industry to make a political point.
Lots happening in the European Union recently
This news comes on the back of several other major developments in Europe recently. Most notably, the ECB’s Christine Lagarde announced the digital euro project. Details of its accompanying digital wallet, which may involve everything from money to digital identity, are slowly dripping out.
Could we see a scenario where the EU’s approved digital wallet, which most European citizens will eventually adopt, will be unable to interact with unknown wallets and exchanges which don’t comply with these new regulations? It’s highly likely that the EU would use such leverage to force compliance with its AML/KYC regulations.
Digital currency is growing up… don’t get left behind
As Binance’s recent reaction to regulatory pressure demonstrates, it’s easy to talk a big game about anarchic ideals like decentralization, anonymity, and flouting regulations, but when the law comes knocking, rational actors like large companies will at least attempt to comply.
The BSV enterprise blockchain has been designed from the outset to comply with existing regulations. Smart developers should choose to build on the only scalable proof-of-work blockchain that has made a point to work within the law from day one.
— Jimmy Nguyen (@JimmyWinSV) July 21, 2021
The EU’s crackdown is only the opening volley in a global effort to tame and regulate the virtual currency space. Expect similar action from the U.S., China, India, and other nations in the future.
Digital currency is growing up, and it’s about time. BSV enterprise blockchain is and always has been ready for these developments. Are you?
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