The European Commission has proposed legislation updates this week that introduce new rules for cryptocurrency service providers.
Under the new updates to the EU’s anti-money laundering and countering terrorism financing (AML/CFT) rules, providers of cryptocurrency services will be mandated to collect information on the sender and recipient of cryptocurrency transactions and the owners of cryptocurrency wallets.
The new rules effectively lift cryptocurrency service providers from a murky and unregulated industry and impose the same know-your-customer (KYC) rules that the EU financial and banking systems have been enforcing for the past decades.
“The proposed reform will extend these rules to the entire crypto sector, obliging all service providers to conduct due diligence on their customers. Today’s amendments will ensure full traceability of crypto-asset transfers, such as Bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing,” EC officials said today.
“In addition, providing anonymous crypto-asset wallets will be prohibited, just as anonymous bank accounts are already prohibited by EU AML/CFT rules.”
EU officials hope the new rules will help authorities impose stricter rules on the cryptocurrency ecosystem and crack down on cybercrime and terrorist groups using accounts at cryptocurrency exchange portals to launder illegal funds.
While the new rules are being enforced in the EU, any cryptocurrency service provider that wants to operate or transfer funds to an EU entity or individual would have to collect data on all users, even if the other party resides outside the EU.
The new rules are currently proposed as an amendment to the 2015 EU Regulation on transfers of funds (Regulation 2015/847). The proposed text is available here [PDF].
A vote on the proposals is expected later this year, barring any delays or additional ammendments.
Source: Recorded Future