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 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 ’s Fifth Anti-Money Laundering Directive (AMLD5) into 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 European Union, 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 time to think about the matter is Bitpay. The payment processor, which facilitates both crypto and fiat 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 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 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 finance 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 Bank (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 Must 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 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 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 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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Unique Zero-Fiat ‘Bitcoin Bond’ Debuts on Bloomberg Terminal

Bitcoin investment

The range of Bitcoin investment options for institutional and retail investors continues to expand as two European companies a zero-fiat Bitcoin Bond on Bloomberg .


This one is for the HODL Crowd

A recently published press release shows that the London Block Exchange (LBX) and Argento have partnered to develop a zero-fiat bond which is denominated in Bitcoin. The and Luxembourg-based companies proudly proclaimed that the product is the first ever Bitcoin Bond in existence and according to Argento manager Phil Millo, “The large investment really dropped the ball on this one.” 

 

What makes the bond unique is that it is the first regulated cryptocurrency financial product with a dedicated ISIN code and the bond zero fiat exposure to investors. Accessible via the Bloomberg Terminal, the product is specifically targeted toward long investors and LBX CEO Benjamin Davies describes the bond being the most suitable for Bitcoin investors looking to grow their long-term Bitcoin wallets in an institutional grade environment where their holdings are not exposed to traditional currency market fluctuations. 

Institutional Grade Crypto Products Gain Ground Everywhere Except the U.S.

The bond is regulated by the United Kingdom’s Financial Conduct Authority (FCA) and Argento has cleverly titled the various bond durations ‘FOMO’, ‘HODL’, and ‘MOON’, each of which is a standard crypto-oriented acronym commonly used by members of the cryptocurrency community.  

Keen investors will note that while the FCA has been stringent in regulated crypto-based financial products and putting a stop to crypto scams, the approval of the zero-fiat bond eclipsed Bakkt’s thrice-delayed debut. Institutional grade crypto-investment products are steadily racking up approvals worldwide as the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) continue to drag their feet in approving institutional grade crypto-products like Bakkt’s Bitcoin exchange and the long-awaited Bitcoin-based Exchange Traded Fund (ETF). 

Another recent setback to note is Binance’s announcement that US-based users would be barred from using the exchange starting in September as a number of the digital assets listed on the exchange cannot be legally offered to U.S.-based investors. Binance CEO Changpeng Zhao that the company intends to launch a regulatory-compliant version of  Binance through its partner BAM exact details of the exchange and its launch date have yet to be released.  

Do you think investors will rush into this new zero fiat Bitcoin Bond? Share your in the comments below! 


Images via Shutterstock, Coveware.com

The post Unique Zero-Fiat ‘Bitcoin Bond’ Debuts on Bloomberg Terminal appeared first on Bitcoinist.com.


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Members of US Congress demanding Facebook put Libra on hold

Four members of the of Representatives sent a letter to Facebook calling for an immediate moratorium on its cryptocurrency Libra, saying both regulators and Congress needs more time to investigate the risk it could pose to the economy.

Members of Congress attempting to put Libra on hold

Regulator’ distaste for Facebook’s Libra has grown significantly in the past couple of weeks. And while the backlash against the controversial cryptocurrency project has been significant, now a few members of Congress have to take the matter into their own hands and put a hold on Libra.

The House of Representatives’ on Financial Services asked for a moratorium on the development of both Libra, Facebook’s digital currency, and Calibra, its native cryptocurrency wallet.

In an letter addressed to Facebook executives Mark Zuckerberg, Sheryl Sandberg, and David Marcus, lawmakers said that Libra “raises serious privacy, trading, national security, and monetary policy for not only Facebook’s over two billion users, but also for investors, consumers, and the broader global economy.”

Democratic representatives Maxine Waters, Carolyn Maloney, William Lacy Clay, Al Green, and Stephen F. Lynch all signed onto the letter, saying intend to hold public hearings on the risks and benefits of crypto-based activities.

“Because Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action,” it said in the letter.

 

Bipartisan agreement on security risks posed by Libra

Democrat lawmakers pointed that Libra was improperly regulated and lacked sufficient oversight and as such could pose “systemic risks” that endanger both U.S. and global stability.

“These vulnerabilities could be exploited and obscured by bad actors, as other cryptocurrencies, exchanges, and wallets have been in the past.”The letter also referenced the Cambridge Analytica scandal, saying that Facebook remains under a consent decree “for deceiving consumers and failing to keep consumer data private.”

The strong language in the lawmakers’ letter shows just how worried they are Libra. Concern over Facebook‘s impact on the global financial system also seems to be one of the rare bipartisan issues in U.S. politics—Republicans are also anxious to resolve Libra’s privacy issues.

While the House of Representatives’ Committee on Financial Services will hold a hearing on Libra on July 17, the Republican-led Senate Banking Committee scheduled its own meeting on Libra on July 16. Last month, sources revealed that David Marcus, the CEO of Calibra, will be testifying.

The post Members of US Congress demanding Facebook put Libra on hold appeared first on CryptoSlate.


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