On 23 January, the EU Commission outlined its approach on cryptocurrencies. The extract of Vice-President Dombrovskis’ speech held at the ECOFIN press conference and regarding cryptocurrencies:
“In terms of financial services legislation: I made some suggestions on how the EU should approach cryptocurrencies.
Make no mistake: We want Europe to embrace the opportunities of blockchain, the technology underlying cryptocurrencies.
But to do so, we must be vigilant and prevent cryptocurrencies from becoming a token for unlawful behaviour.
(…) The updated rules against money laundering, which we agreed on in December (2017), will put cryptocurrency exchanges and custodial wallet providers within the scope of money laundering supervision.
That means less anonymity and more traceability, through better customer identification, and strong due diligence.
(…) Crytocurrencies may have ramifications for many other areas, including for central banks. That’s why I intend to bring together key authorities and the private sector in a high level roundtable very shortly to assess the longer term situation beyond the current market trends.”
The speech refers to the up-dated rules against money-laundering, i.e. the proposal for the 5th AML Directive issued by the Council of the European Union in December 2017 (current and non-finalised version), which states the following in its recitals:
(6) Providers of exchange services between virtual currencies and fiat currencies (that is to say coins, banknotes and electronic money of a country that is designated as a legal tender and is accepted as a medium of exchange in the issuing country) as well as custodian wallet providers are under no obligation to identify suspicious activity. Terrorist groups may thus be able to transfer money into the Union’s financial system or within virtual currency networks by concealing transfers or by benefiting from a certain degree of anonymity on those platforms. It is therefore essential to extend the scope of Directive (EU) 2015/849 so as to include providers engaged in exchange services between virtual currencies and fiat currencies as well as custodian wallet providers. For anti-money laundering and countering the financing of terrorism (AML/CFT) purposes, competent authorities should be able to monitor through obliged entities the use of virtual currencies. This would provide a balanced and proportional approach, safeguarding technical advances and the high degree of transparency attained in the field of alternative finance and social entrepreneurship.
(7) The anonymity of virtual currencies allows their potential misuse for criminal purposes. The inclusion of providers engaged in exchange services between virtual currencies and fiat currencies and custodian wallet providers will not entirely address the issue of anonymity attached to virtual currency transactions, as a large part of the virtual currency environment will remain anonymous because users can also transact without these providers. To combat the risks related to the anonymity, national Financial Intelligence Units (FIUs) should be able to obtain information allowing to associate virtual currency addresses to the identity of the owner of virtual currencies. In addition, the possibility to allow users to self-declare to designated authorities on a voluntary basis should be further assessed.
- Remarks by Vice-President Dombrovskis at the ECOFIN press conference (Full text)
- Proposal for a Directive of the European Parliament and of the Council amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and amending Directive 2009/101/EC (Full text)