During a sitting at the European Parliament on Thursday, 19th April 2018, MEPs voted for stricter regulations in the crypto sector. Through this directive, crypto exchanges and wallet providers will be subjected to closer regulations. The European Union is taking such measures to help trace and detect money laundering and terrorism activities.
This directive will form part of the already existing EU Anti-Money Laundering Directive. In addition, the passed law is going to investigate cryptocurrency users, where they need to apply and register themselves for further due diligence procedures prior to exchange cryptocurrencies and services. Additionally, crypto users cannot remain anonymous on the platform; authorities need to keep track who is trading or using these virtual currencies.
During the sitting, Member of the European Parliament (MEPs) reduced the threshold to identify prepaid and virtual cardholders from €250 to €150. The European Union believes that there are “risks linked to virtual currencies” need to be addressed.
Why did MEP’s see the need to pass this directive?
These measures have been introduced to trace illegal doings happening within EU member states. Through this directive, terrorist activity in European countries can be easily traced before it happens. Krišjānis Kariņš, co-rapporteur on the amendments stated that “Criminals use anonymity to launder their illicit proceeds or finance terrorism.” Through this directive, Mr Kariņš believes that it will “address the threats to our citizens… by tightening rules regulating virtual currencies and anonymous prepaid cards.”
Judith Sargentini stated that “We lose billions of euros to money laundering, terrorism financing, and tax evasion – money that should go to fund our hospitals, schools and infrastructure. We introduced tougher measures, widening the duty of financial entities to undertake customer due diligence. This shine a light on those who hide behind companies and trusts and should keep our financial system clean.”
The EU has already set frameworks to improve better blockchain connectivity within member states. In fact, last week, 22 European countries signed an agreement on the launch of the EU-wide Blockchain applications. Although this agreement does not speak about cryptocurrencies, it’s aim is to provide a single market within its member states using blockchain technology.
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