2020 is shaping up to be a huge year in the world of Bitcoin. Not only will it be the year Bitcoin SV (BSV) returns to its original design with the Genesis upgrade, but the implementation of the EU Fifth Money Laundering Directive (5MLD) will bring sorely needed regulation to the cryptocurrency world. As legal experts have informed CoinGeek, these new anti-money laundering and counter terrorist financing (AML/CTF) laws will completely change the face of the market.
The 5MLD are an expansion of current AML/CTF regulations into the cryptocurrency space, and were designed to protect against potential abuses of the technology by criminal actors. Experts expect the U.K. to implement 5MLD, and the EU has required member states to adopt the regulations by January 10, 2020.
With the new rules, digital asset exchanges and custodian wallets, of which Binance is a great example, are expected to comply with AML/CTF regulations. As Binance keeps offices in Malta, an EU state, they will be required to comply with the new regime. Experts tell us:
Those who fall into these categories must comply with obligations on customer due diligence measures, risk assessments and reporting suspicious activity. They will also be required to register with a relevant supervisor which is expected to be the Financial Conduct Authority (FCA).
This can specifically be a threat to Binance’s current business model, which lacks any serious AML/CTF protocols. The exchange has shown a history of trying to evade stricter regulation, like when they chose to leave Japan in favor of Malta in 2018. But even if they try the same trick again, these regulations will still trip them up.
Experts note that the 5MLD are potentially going to gain additional provisions in the U.K. to protect against exchanges that try to flee their regulations. These additional requirements, they note, “could relate to bringing further cryptoassets service provides within scope of the U.K. anti-money laundering and counter-terrorist financing regime and dealing with cross-border risks posed by cryptoassets (for example, the risk that firms based outside the U.K. would avoid U.K. regulatory standards).
Those same requirements will cause huge problems for other exchanges working in the shadows, like Kraken, Shapeshift and BitMex. All of these exchanges have done things that would make regulators question their basic practices, and what criminality they may have helped facilitate.
Stories like Crypto Capital, who have links to almost all of these exchanges and has been accused of money laundering for the Colombian drug cartel, have pushed regulators to get serious about regulating the digital asset space. Exchanges have felt comfortable working with accused criminals because they have had no regard for the law whatsoever, but 5MLD and other regulations to come will change that.
In a statement to CoinGeek, Kraken clarified that it had “stopped working with them [Crypto Capital] in early 2017, and only worked with them for a short period of time.”
As common sense regulations become the norm and exchanges are held to account, operating without oversight will become a thing of the past and states will now move to protect investors from being swept up in these crimes.
As Satoshi originally intended, BSV has been designed to keep everybody accountable, adhering to regulations and shining a spotlight on criminality. Exchanges that have stuck with BSV are highly likely to have recognized its utility, respect its adherence to the law, and can be considered reputable themselves. Meanwhile, exchanges like Binance and Kraken have delisted BSV citing their problems with Dr. Craig Wright. In reality, they have a problem with the truth Wright has spoken, citing the already proven criminality the crypto exchange world has helped to create.
Editor’s note: This article has been updated with Kraken’s statement.
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