Netherlands-based cryptocurrency mining pool Simplecoin announced they are shutting down due to regulatory pressure from the European Union. The firm joins Bottle Pay, a cryptocurrency payment startup, in citing the upcoming Fifth Money Laundering Directive (5MLD) as the reason. Bottle Pay’s closure came just three months after raising a $2 million seed round.
The new regulations will come into effect Jan. 10, 2020, for the Dutch EU member states. A notice on Simplecoin’s website explains that it is closing on Jan. 1, 2020, because the new rules will require the company to implement and adhere to several anti-money laundering (AML) and know-your-customer (KYC) policies. Under the directive, Simplecoin would be considered a “custodial wallet provider.”
IMPORTANT MESSAGE: Simplecoin is shutting down January 1st, 2020. Withdraw your balance. More info: https://t.co/aTMbM4IWgR
— Simpleco.in (@Simpleco_in) November 19, 2019
5MLD imposes stringent reporting responsibilities for cryptocurrency firms. The regulations also authorize financial intelligence units to obtain the addresses and identities of cryptocurrency owners and users. The Simplecoin team is against these new AML/KYC requirements because they infringe on users’ privacy.
The team explained that they would be compelled to force their users to provide identifications for anti-money laundering purposes. They were unable to find an alternate solution. While Simplecoin believes in the potential and power of cryptocurrency, they refuse to risk their users’ privacy. Simplecoin has 42,000 users and two employees, according to The Block.
Simplecoin users have until Dec. 20 to withdraw their funds before the wallets, and the mining service goes offline. Users have till Dec. 31 to delete their account information by following the instructions on the Data Policy page.
Simplecoin was founded by Christian Grieger and Marvin Janssen with intentions to make mining a smooth and trouble-free task. Grieger’s other company, Bitcoin gaming platform Chopcoin, is also closing sighting the same reason. Grieger told The Block that he has some plans for other businesses but declined to share further details.
Digital wallet exchanges and custodian wallets like Binance, which keeps offices in EU state Malta, are expected to comply with the 5MLD. The new regime, however, poses a threat to Binance’s business model, which lacks serious AML/CTF protocols. The exchange has a history of trying to evade stricter regulation, such as leaving Japan in favor of Malta in 2018.
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