EU Members Adopt Tougher Crypto Rules Than AML Directive Requires

EU Members Adopt Tougher Crypto Rules Than AML Directive Requires

Europe is gradually tightening the rules for the crypto space. A wave of new regulations are introducing stricter requirements for companies operating in the industry and cryptocurrency users are going to feel the difference in the coming months. The measures stem from the obligation of member states to transpose EU’s Fifth Anti- Directive (AMLD5) national law by January. Unfortunately, they often go beyond what Brussels wants them to do.

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German Regulations Chase Out Crypto Companies Like Bitpay

Germany, the flagship of the , is one of the first to make the changes. New anti-money laundering (AML) regulations entering into force next year will oblige digital asset exchanges as well as providers of crypto payment and custodian services to apply for licenses from the Federal Financial Supervisory Authority (Bafin). They have to do so by the end of 2019, as the new pan-European legislation is supposed to be implemented in January 2020.

EU Members Adopt Tougher Crypto Rules Than AML Directive Requires

Starting from next year, German financial authorities will consider digital coins a financial instrument. And while some welcome the regulatory clarity regarding the status of cryptocurrencies, others think many more aspects need clarification and even look at the new rules as an obstacle to normal business. Members of the local crypto community believe the government is actually hurting the German blockchain industry and sending crypto companies abroad.

A major industry player that evidently needs some to think about the matter is Bitpay. The payment processor, which facilitates both crypto and transactions, is not providing services to German customers anymore. About a week ago, the platform announced on its website that it doesn’t currently work with merchants or users based in the Federal Republic among countries such as Algeria, Bangladesh, Bolivia, Cambodia, Ecuador, Egypt, Indonesia, Iraq, Kyrgyzstan, Morocco, Nepal, and Vietnam.

The list of supported markets is regularly updated according to Bitpay’s evaluation and understanding of local laws. And the company says it engages with local authorities to fully understand the rules in order to retain compliance and offer businesses the opportunity to accept blockchain payments. But the fact that it has pulled out of Germany at this point, even if it’s only a temporary step, means that new German regulations are already making it harder for crypto companies to operate freely.

Some serious businesses, like the largest food delivery portal in Germany, Lieferando, have been offering bitcoin as a payment option to their customers through cooperation with Bitpay. Members of the country’s crypto community have been warning that the new rules are going to chase other companies out of Germany in search for a more favorable climate in different jurisdictions in Europe or elsewhere.

Prague Tightens Noose on Nascent Crypto Industry

The Bundesrepublik is not the only EU member state taking the road to much stricter standards for the crypto industry. According to reports by local media, the Czech Republic is now working on its own set of rules, further tightening the noose around cryptocurrency users. For example, failure to register with the national Trade Licensing Office will lead to massive fines for service providers in the space.

EU Members Adopt Tougher Crypto Rules Than AML Directive Requires

Again, these measures have been inspired by the latest European AML directive, but the country’s leading business daily wrote last week that they are going to be tougher than the requirements set forth by the EU. In an article on the subject, Hospodářské noviny recently pointed out that the new cryptocurrency regulations will increase oversight on a wider range of companies than mandated by Brussels, jeopardizing the competitiveness of the Czech crypto sector.

Estonia is another EU member that has been tuning its crypto regulations in recent months. The tiny Baltic nation was one of the first on the continent to create favorable conditions for businesses dealing with digital assets and attracted many of them to its jurisdiction. Towards the end of last year, however, regulators in Tallinn took steps to tighten the existing licensing regime. As a result, it’s going to take longer and it will be harder in the future to acquire an Estonian license.

This spring, the ministry presented amendments to the country’s anti-money laundering and counterterrorist financing legislation. One of the changes requires Estonian companies to keep their headquarters in the country and entities incorporated abroad now have to maintain a permanent office in the republic. Estonia adopted its Money Laundering and Terrorist Financing Prevention Act in 2017 to transpose the provisions of the Fourth Anti-Money Laundering Directive.

France Introduces Optional Licensing

Other European nations have also taken crypto regulation seriously. Earlier this year, France announced intentions to publish updated rules for the crypto industry. In April, the government in Paris adopted a bill creating the legal framework for service providers in the space and projects conducting initial coin offerings. The law introduces mandatory registration with the French Financial Markets Authority (AMF) for providers of crypto custodian services as well as optional licensing for all service providers including cryptocurrency brokers, dealers and exchange operators.

EU Members Adopt Tougher Crypto Rules Than AML Directive Requires

About the same time, Finland enacted its law regulating crypto service providers like trading platforms, wallet providers and issuers of digital coins. The Act on Virtual Currency Providers entered into force on May 1 after it was approved by the country’s president. The Financial Supervisory Authority (FSA) was tasked with registering and supervising entities that fall into these categories. The new legislation and the introduction of other regulations by the FSA led to changes in the customer verification procedures applied by the peer-to-peer crypto exchange Localbitcoins.

Holland Abolishes Licensing Requirement

Obliging crypto companies to apply for licenses issued by regulators is a step too far and the case with the Dutch AMLD5 legislation demonstrates that. In early July, the Netherlands’ finance minister filed a bill in parliament implementing the directive and amending his country’s Money Laundering and Terrorist Financing Prevention Act. The draft envisaged the introduction of a licensing regime for crypto exchanges and wallet providers.

However, the unnecessary provision regarding licensing was met with a negative reaction from the Dutch Council of State, a body that advises Holland’s parliament on draft legislation prepared by the executive power and provides assessment of bills in terms of compliance with EU law. According to the council, AMLD5 does not offer a choice between licensing and registration, hence the minister’s proposal is not in line with the directive.

In its considerations, the legal portal Lexology reported, the Council of State also notes that the advice of the Dutch Central (DNB) and the Financial Markets Authority (AFM) to introduce a licensing system in order to improve the effectiveness of oversight does not mean such a measure is proportionate, given the burden it imposes on service providers. As a result, the licensing requirement was abolished in the latest version of the law submitted to the Dutch parliament. There’s only a registration requirement, which is in line with EU’s directive and the Council of State’s suggestion.

AMLD5 Be Transposed Into National Law by January

The Fifth Anti-Money Laundering Directive was adopted by the Council of the European Union in May 2018 and published in the official journal of the EU on June 19 last year. AMLD5 modifies AMLD4, which was released in 2015. The revision was proposed in the summer of 2016 as part of the European Commission’s Action Plan against terrorism prepared after the terrorist attacks in Paris and Brussels and the Panama Papers scandal.

EU Members Adopt Tougher Crypto Rules Than AML Directive Requires

AMLD5 entered into force on July 9, 2018 and EU member states are obliged to transpose it into their legislation by Jan. 20, 2020. One of its key goals is to extend the scope of anti-money laundering laws to cover crypto exchange platforms and wallet providers. It also contains provisions regarding know your customer (KYC) rules and procedures. The implementation of the new directive is mandatory for EU countries.

In many cases, national laws transposing AMLD5 introduce regulations that are tougher than the directive requires, limiting services that have so far been readily available to the crypto community in Europe. Platforms such as Local.Bitcoin.com offer cryptocurrency users a marketplace where they are free to trade bitcoin cash (BCH) on a peer-to-peer basis and in a secure manner, without the need for KYC.

Why do you think regulators and authorities in EU member states adopt stricter measures than required by the Fifth Anti-Money Laundering Directive? Share your thoughts on the subject in the comments section below.


Images courtesy of Shutterstock.


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The post EU Members Adopt Tougher Crypto Rules Than AML Directive Requires appeared first on Bitcoin News.


Source: bitcoin.com
EU Members Adopt Tougher Crypto Rules Than AML Directive Requires

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US, EU and Japan Could Trigger ‘Cold Currency War’ by Debasing Fiat

The world’ major banks are waging war to determine who can make their respective currency weaker. With the likelihood of even more printing and negative interest rates ahead, people need to be ready to see the value of their mone
: devcoins
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US, EU and Japan Could Trigger ‘Cold Currency War’ by Debasing Fiat

The world’ major banks are waging war to determine who can make their respective currency weaker. With the likelihood of even more printing and negative interest rates ahead, people need to be ready to see the value of their evaporate and the price of everything else go up.

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Cold Currency War Is Heating Up

Many financial market analysts now expect that interest rates in developed economies will soon be cut again. While this is not unheard of, it could presage a new global currency war with the central banks of the U.S., EU, and other countries all trying to debase their respective fiat.

Besides cutting interest rate, central banks taking part in such a war can also implement negative interest rates and embark on even more quantitative easing. The former simply means that you will lose money by saving it in a bank account and the latter is the policy under which trillions of dollars were already printed.

US, EU and Japan Could Trigger 'Cold Currency War' by Debasing Fiat

The reason anyone in their right minds would want to start a currency war is to spur growth by punishing people and companies for saving money. The idea is that if people will know they are losing money over time they will just go shopping as soon as they can, and companies will choose to invest in adding new factories or hiring more workers instead of hoarding cash. Cynics might also say that it helps politicians fake economic growth by having the price of assets such as stocks and real estate skyrocket in comparison to the local currency while they claim there is no inflation in the market.

At the same time, having a weaker currency does make the country appear more competitive in the global market as its goods and services are cheaper in international terms. However, when other countries are messing with their rate to support local industry by making it appear cheaper, like China most notably, many countries just call it unfair currency manipulation.

US to Win Race to the Bottom?

While it is not hard to see who will lose in such a situation, it is much more difficult to guess who will “win” in such a war. There are supporting factors for different viewpoints, but some of the smart money is betting on the American dollar to shed most value.

“If there is a winner in this ‘cold currency war,’ it’s going to be the U.S. in the sense that the dollar is more likely to weaken than strengthen from here,” Joachim Fels, global economic advisor at investment management giant Pimco, told CNBC on Monday. “Clearly, we are getting back into the situation where everybody would like to see a weaker currency. Nobody, no central bank, really wants a stronger currency and that’s why it’s a cold currency war,” he added.

One major reason for the U.S. to be the likely winner in this fiscal race to the bottom is the strong public pressure President Trump is putting on the Federal Reserve to comply with thinking on the matter. This is in contrast with the established tradition of letting central bankers work independently from national government control, or at least to appear to be so.

“With almost no inflation, our Country is needlessly forced to pay a MUCH higher interest rate than other countries only because of a very misguided Federal Reserve. In addition, Quantitative Tightening is continuing, making it harder for our Country to compete,” the president exclaimed in a recent series of tweets. “As good as we have done, it could have been soooo much better. Interest rate costs should have been much lower, & GDP & our Country’s wealth accumulation much higher. Such a waste of time & money.”

What You Can Do to Protect Your Savings

Ordinary people around the world have very little power to affect how any of this plays out. Central bankers are not elected by or even accountable to the general public. Political parties, even those that mainly on advancing specific economic policies and ideologies, rarely touch upon the matter of the strength of the local fiat in their campaigning. In that respect, President Trump is at least more transparent than most, as he shared his opinions about the strength of the dollar versus other other currencies long before taking office.

Therefore, the only course of action most people have to deal with a currency war is simply to diversity into assets that are less likely to suffer collateral damage. This may mean that we will experience a drive of new investors into cryptocurrency who see it as a hedge against their fiat losing value.

What do you think about the world’s most powerful nations getting ready for waging a currency war? Share your thoughts in the comments section below.


Images courtesy of Shutterstock.


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: bitcoin.com
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EU Calls Crypto Market ‘Anticompetitive,’ Says Central Bank Coin Would Help

In a wider report on market competition in fintech, the ’s Policy Department for Economic, Scientific and Quality of Life Policies devoted a section to “digital currencies,” denoting two varieties: “private digital currencies … and central -issued currencies.”

Both types “rely on distributed ledger technologies, like ,” the report says; however, a -based central bank currency does not currently exist (though plenty of countries are thinking about implementing one). 

“Examples of private digital currencies,” it continues, “are Bitcoin, Ethereum, LiteCoin [yes, actually capital C], and Ripple.” Even while calling them “digital currencies,” the report does distinguish the difference between centralized digital currencies and proper cryptocurrencies. The report also endorses Bitcoin’s disruptive potential, echoing comments made by the ’s legislative peers across the pond in last week’s hearings.

“These cryptocurrencies offer technological and operational paradigms that are a of disruption for the entire sector, including monetary policy and financial stability,” the report reads.

The EU’s Competition Concerns

Bitcoin and ether, however, are sucking up too much cryptocurrency share, the report argues. In March 2017, they collectively “accounted for 88 percent of the total cryptocurrency capitalisation … a relevant indicator of the current concentration.” In March 2015, bitcoin’s was 86 percent alone (currently, it’s just under 70 percent). 

The policy department appears to view bitcoin and ether’s market dominance as evidence of a problem with competition among cryptocurrencies. 

“Competition problems of the [cryptocurrency] market are quite sophisticated, given the complex activities that are part of the value chain,” the report reads. One of the more complex anticompetitive trends, it claims, is “the presence of network effects” that can lead to “an increasingly high number of users,” which reads like a veiled euphemism for free market dynamics.  

To the EU, the obvious “remedy” to challenging the market’s choice of bitcoin as its favored cryptocurrency is a central bank digital currency.

“The arrival of permissioned cryptocurrencies promoted by banks, even by central banks, will reshape the current competition level in the inter-cryptocurrency market, broadening the number of competitors,” the EU argues, in the same report which branded cryptocurrencies as “a source of disruption,” for the monetary policies of these central banks. Given this, one might wonder if the EU is rooting for the little guy against bitcoin’s “large market power” or if it’s trying to catch up. 

“Cartel” of Bitcoin Services

The EU acknowledges that “[m]any of [the cryptocurrency market’s] players operate from global locations outside the jurisdiction of European competition authorities, which makes investigation or prosecution on anti-competitive behaviours more difficult.” Even so, it’s keeping its pulse on cryptocurrency’s auxiliary markets.

It’s particularly worried about so-called “vertical integration strategies,” wherein “[e]xchange, wallet and payment providers may design behaviour practices to exclude each other from the market, e.g., by receiving incentives from miners favouring a specific cryptocurrency, or from certain dominant players trying to exclude competitors in other activities.” 

Citing particulars, the report says that five exchanges account for 75 percent of all of the market’s volume. It also calls bitcoin mining “a non-contestable market because of the presence of high barriers of ” energy and hardware costs create. (Right now, the top-five known mining pools account for 64.7 percent of the network’s hashrate).

Still, it’s seemingly comfortable with the fact that Europe houses 42 and 37 percent of all wallet and exchange providers, respectively, as well as 33 percent of payment platforms. To its detriment, Europe only occupies a paltry (13 percent) share of global mining efforts, which it calls “the most strategic, sophisticated and technology dependent activity in [the market].” 

The post EU Calls Crypto Market ‘Anticompetitive,’ Says Central Bank Coin Would Help appeared first on Bitcoin Magazine.


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