EU to make Bitcoin traceable and ban anonymous crypto wallets in fight against money laundering

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Cryptocurrency exchanges could be forced to collect details of people who send and receive cryptocurrency under new rules proposed by the European Commission.

The EU executive branch announced the potential change on Tuesday as part of a package of reforms aimed at tackling financial crime within the bloc.

“The objective of this package is to improve the detection of suspicious transactions and activities, and to close loopholes used by criminals to launder illicit proceeds or finance terrorist activities through the financial system,” the Commission said in a statement. communicated.

The new law would establish a new EU-wide Anti-Money Laundering Authority (AMLA) with cryptocurrency oversight by 2023.

How would this affect cryptocurrency trading?

Some crypto-asset service providers are already covered by EU anti-money laundering and terrorist financing rules.

The proposed law would apply these rules to the entire crypto industry, requiring providers of services such as crypto exchanges to exercise due diligence on their users.

This would align crypto assets with wire transfers, applying what’s known as the travel rule to crypto transactions to make them traceable.

In practice, this means that a service provider exchanging crypto on behalf of a customer would have to register their name, address, date of birth and account number, as well as the name of the intended recipient of the transfer.

Anonymous crypto-asset wallets would also be banned under the new law – just as anonymous bank accounts already are – in an effort to make transactions using Bitcoin and other cryptos fully traceable.

“A harmonized framework”

“These proposals have been designed to strike the right balance between tackling these threats and meeting international standards without creating an excessive regulatory burden on the industry,” said the European Commission.

“These proposals will help the European crypto-asset industry to grow, as it will benefit from an updated and harmonized legal framework across the EU.”

EU states and the European Parliament have the final say on the proposals, which means it could be two years before they become law.

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