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New EU draft law seeks to end bitcoin’s ...

New EU draft law seeks to end bitcoin’s anonymity

Published on March 15, 2017

EU Parliament members have published new draft legislation, seeking to regulate digital currencies. The proposal is deliberating to extend the scope of the Anti-Money Laundering Directive (AMLD) and include the virtual currencies like bitcoin. The existing AMLD, published in May 2015, does not include coverage on such currencies. The draft law could possibly end the anonymity of cryptocurrency users.

The proposal states that “competent authorities should be able to monitor the use of virtual currencies,” while anonymity would be a “hindrance than an asset for virtual currencies” especially when used for criminal purposes. If approved, the draft law will empower financial watchdogs from EU member countries to identify users by their bitcoin addresses.

“To combat the risks related to the anonymity, national Financial Intelligence Units (FIUs) should be able to associate virtual currency addresses to the identity of the owner of virtual currencies,” says the proposal. “In addition, the possibility to allow users to self-declare to designated authorities on a voluntary basis should be further assessed.”

However, the attempts to end the anonymity of cryptocurrency are not seen for the first time. Last year, the European Union Commission proposed an idea to create a central database that would store records of virtual currency users’ identities and wallet addresses. The database was planned to be accessible to financial intelligence units of EU member countries. According to the same proposal, virtual currency exchanges were required to report who and when used their serviced.

It’s clear that both proposals initiated by EU aim to address the issue of governments oversighting unlawful financial tactics conducted by terror groups. Further, it would solve the problem of “avoiding unnecessary obstacles to the functioning of payments and financial markets for ordinary, law-abiding citizens and businesses.”

If cryptocurrencies are included in the new AMLD directives, bitcoin exchanges will lose their bestselling feature – anonymous transactions.