Cryptocurrency has often been recognised as a creation that can help mass numbers of people. Most notably the unbanked populations who do not have access to financial services or have to pay over the odds to transfer fiat currencies to other countries. Yet, crypto has not been cleared of criticism over the years with many pointing to its ability to help with money laundering schemes, criminal activity and even acts of terrorism.
It is important to remember that steps were taken within the EU in 2018 to try and stop such actions occurring and simultaneously reducing any criticism or backlash against crypto. What’s already been done? And when do EU member states need to take note?
The latest rules which were implemented to stop money laundering also included cryptocurrencies. Although these laws do not need to be fully implemented within member states until January 2020.
For the most part, the updated changes revolving around cryptocurrency will mean that intelligence units can access the information of those making crypto payments. This may feel obtrusive in the anonymous nature of cryptocurrency, yet, the accessing of handler information will be done confidentially, meaning the general public will still use crypto in the same way and will not feel any difference in the anonymity of the current status quo.
It just means that anyone owning a crypto wallet and is using it for illegal purposes may have their details checked confidentially by a specialised unit. For anybody using these safe wallets this news should be taken with a smile. It is one more way that higher authorities are securing an environment that relies on security to make it work.
The Directive in Detail: Three key implications
That covers the EU changes from afar but taking a closer look at what has been agreed evidences three changes, which will directly affect cryptocurrency and those that use it. They are:
- Know Your Customer
Crypto service providers are made to submit reports confirming any suspicious activity. This is being branded as Know Your Customer (KYC) and will help the higher authorities investigate any suspicions an exchange may have. This is already happening with several respected companies in the industry. For example, Luno, which offers a proven Bitcoin wallet solution, has already appointed a Money Laundering Reporting Officer who will be responsible for overseeing all aspects of compliance.
- Removing Anonymity
The second implication is the one that makes headlines the most because it is arguably the most controversial. As aforementioned, units may request information relating to payments and transactions, and thus, crypto anonymity is removed to catch fraudsters and criminals.
- Wallet Providers will Need to Be Registered
The third detail of the EU’s work that will affect crypto businesses affects those that offer wallets. They will be forced to register with their local financial regulators. For example, a company offering a Bitcoin wallet and are based in the UK would have to be registered with the Financial Conduct Authority.
Overall, these changes should prevent any criminals from tarnishing the reputation and the altruistic work that crypto and blockchain technology accomplishes.