03 Feb EU to regulate virtual currency exchanges and wallet providers
The European Commission has revealed it wants to prevent the abuse of virtual currencies for money laundering and terrorist financing purposes by bringing virtual currency exchanges into the scope of the Anti-Money Laundering Directive.
Announcing its Action Plan to combat terrorist financing, Vice-President Valdis Dombrovskis, in charge of the Euro and Social Dialogue, said:
“We want to improve the oversight of the many financial means used by terrorists, from cash and cultural artefacts to virtual currencies and anonymous pre-paid cards, while avoiding unnecessary obstacles to the functioning of payments and financial markets for ordinary, law-abiding citizens.”
Although virtual currencies are included in a list of largely unregulated value transfer methods, virtual currencies and pre-paid cards are singled out for more immediate and specific measures. The Commission’s proposals include requiring Bitcoin and virtual currency exchanges to apply customer due diligence controls when exchanging virtual for real currencies.
Acknowledging the innovation of virtual currencies and that they are ‘considered a useful tool for rapid international payment transfers and low cost money remittances’, the Commission indicated it resisted an outright ban on the grounds they represent a ‘small market’.
As members will already be aware, EDCAB can now reveal the Commission’s plans to go beyond bringing exchanges under the 4th Anti-Money Laundering Directive. Official documents, seen by EDCAB, confirm the Commission’s intention of:
… applying the licensing and supervision rules of the Payment Services Directive … to virtual currency [exchanges and …] “wallet providers”.
The Commission’s virtual currency proposals are in response to last November’s call by the European Council to take action on virtual currencies and follow last week’s public hearing on virtual currencies in the European Parliament.
EU policy-makers and legislators, the European Commission and supporting institutions, and EU regulators all have virtual currencies on their current agenda. EDCAB, the only Brussels-based independent public policy platform focused on virtual currencies and distributed ledger technology, is actively engaged in dialogue with MEPs and all European Commission directorates.