The European Parliament introduces new rules for regulation of the crypto-currency market. By a majority vote it was decided to ban anonymous trade in crypto-currencies for very good purposes - combating money laundering and possible financing of terrorism.
Procedures for verification of users will become mandatory both for exchanges in the EU territory and for services for registering crypto-currency wallets. In fact, this means that the basic property of blockchain and crypto currencies - anonymity - is recognized as a threat at the state level. On the other hand, volumes of operations with crypto-currencies have become so great that it is impossible to ignore them. However, it is possible to adjust this developing market to the strict rules of the banking sector. How and why will the European Union do this?
Digital assets were used most illegally just a few years ago. Now it is possible to buy a good car for a handful of bitcoins, and transactions made for the purpose of acquiring something very unlawful can be tracked even after years. So, what are results of such a rapid development? First, the market stepped out in the light and now it cannot be ignored.
Secondly, the blockchain technology and crypto-currencies offers ample opportunities. However, regulators and state structures in each region react differently to the new acquaintance.
The US lawmakers, for example, want to basically regulate taxation and combine it with protection of their users, as follows from meetings on the Capitol Hill and the SEC policy. Chinese and South Korean authorities are more radical. And the European Union is still cautious: services and exchanges that work with crypto currency will be required to receive a special license. Thus, the European parliamentarians decided to make the crypto-currency market follow the same rules that already operate in the banking system.
Exchange operations are in the biggest need for regulation as they concern buying and selling crypto currency for fiat currencies. Since banks inevitably participate in this process, it is logical to apply similar rules. And identity of a crypto currency user can be verified right at the stage of an exchange. Exceptions are cash transactions. This exchange market will continue to exist in parallel - as long as there are crypto-currencies and cash.
In general, anonymity when using crypto currency is voluntary. For example, if a company accepts a crypto currency, then the buyer does not have to deal with an anonymous counterparty. Already now, many people agree to identify themselves when creating crypto-currency wallets or exchange accounts. Traders even say that exchanges, which do not conduct KYC procedures (Know Your Client, client authorization) and do not require a copy of a passport or other ID from the user, cause suspicion.
The EU has taken a step forward towards regulating and anti-anonymity. It is worth noting, however, that creating a wallet for Ethereum, for example, is a technical operation, which involves downloading and installing special software. Thus, if we talk about de-anonymization of all wallets, then it will be necessary to oblige developers to close access to software for unverified users. Not all companies and development teams are in the jurisdiction of the EU, so watchdogs will actually need to restrict access to sites and file storages to close access to such software. This is akin to blocking the Internet, which is currently impossible.
So far, the convergence of the financial sector and the digital monetary system looks beneficial for both parties. Obviously, regulators, banks, and the monetary system will rather adapt to needs of the new digital economy than to ban them because Europe has always demonstrated a rationalistic approach.
source: forbes.com
Procedures for verification of users will become mandatory both for exchanges in the EU territory and for services for registering crypto-currency wallets. In fact, this means that the basic property of blockchain and crypto currencies - anonymity - is recognized as a threat at the state level. On the other hand, volumes of operations with crypto-currencies have become so great that it is impossible to ignore them. However, it is possible to adjust this developing market to the strict rules of the banking sector. How and why will the European Union do this?
Digital assets were used most illegally just a few years ago. Now it is possible to buy a good car for a handful of bitcoins, and transactions made for the purpose of acquiring something very unlawful can be tracked even after years. So, what are results of such a rapid development? First, the market stepped out in the light and now it cannot be ignored.
Secondly, the blockchain technology and crypto-currencies offers ample opportunities. However, regulators and state structures in each region react differently to the new acquaintance.
The US lawmakers, for example, want to basically regulate taxation and combine it with protection of their users, as follows from meetings on the Capitol Hill and the SEC policy. Chinese and South Korean authorities are more radical. And the European Union is still cautious: services and exchanges that work with crypto currency will be required to receive a special license. Thus, the European parliamentarians decided to make the crypto-currency market follow the same rules that already operate in the banking system.
Exchange operations are in the biggest need for regulation as they concern buying and selling crypto currency for fiat currencies. Since banks inevitably participate in this process, it is logical to apply similar rules. And identity of a crypto currency user can be verified right at the stage of an exchange. Exceptions are cash transactions. This exchange market will continue to exist in parallel - as long as there are crypto-currencies and cash.
In general, anonymity when using crypto currency is voluntary. For example, if a company accepts a crypto currency, then the buyer does not have to deal with an anonymous counterparty. Already now, many people agree to identify themselves when creating crypto-currency wallets or exchange accounts. Traders even say that exchanges, which do not conduct KYC procedures (Know Your Client, client authorization) and do not require a copy of a passport or other ID from the user, cause suspicion.
The EU has taken a step forward towards regulating and anti-anonymity. It is worth noting, however, that creating a wallet for Ethereum, for example, is a technical operation, which involves downloading and installing special software. Thus, if we talk about de-anonymization of all wallets, then it will be necessary to oblige developers to close access to software for unverified users. Not all companies and development teams are in the jurisdiction of the EU, so watchdogs will actually need to restrict access to sites and file storages to close access to such software. This is akin to blocking the Internet, which is currently impossible.
So far, the convergence of the financial sector and the digital monetary system looks beneficial for both parties. Obviously, regulators, banks, and the monetary system will rather adapt to needs of the new digital economy than to ban them because Europe has always demonstrated a rationalistic approach.
source: forbes.com
