The investment world is as new to digital currencies as central banks and governments are, although the latter have perhaps been quicker to caution against the potential of digital currencies to be used fraudulently. In a recent report, the European Parliament detailed several amendments related to the use of financial systems for money laundering and financing of terrorist activities. This is the latest anti-laundering directive and one which seems to focus particularly on digital currencies, which the EUP refered to as "marginal" at the present time, although it did allow for the possibility "that they will become increasingly important," according to BraveNewCoin.
Directive (EU) 2015/849 Requires Compliance by June of 2017
The directive in question, which is numbered (EU) 2015/849, attempts to address the potential for money laundering. It was enacted on June 25 of 2015 and is nearing the end of its two-year implementation window. All EU member states must be in compliance with the directive by June 26 of this year. This directive is the fourth to address laundering issues, the first having been enacted in 1991. Through the course of the directives, the EUP's definition of money laundering has evolved to include drug offenses, impositions on the financial world, terrorist activities, and more. This particular directive focuses on bitcoin and other digital currencies. While previously various issuers and administrators of digital currencies and wallets were exempt from regulations requiring the identification of suspicious activity, this directive's amendment aims to change that. All of those businesses must be licensed or registered.
Anonymity of Digital Currency
One of the major draws of cryptocurrency to the wider world has been its free and anonymous status, considering that it is not tied to any central bank and that transactions are typically done via heavily encrypted and secretive procedures. In an amendment to the most recent directive issued last July, the EUP indicated that digital currency "does not possess the legal status of currency or money" and, beyond that, that digital currencies "cannot be anonymous." The latter of these two stipulations was reportedly initiated by the Parliament itself.
The Parliament has reportedly also suggested the creation and maintenance of a central database for the purpose of "registering users' identities and wallet addresses accessible to FIUs, as well as self-declaration forms for the use of virtual currency users." The reasoning behind such a move would be to better monitor transactions made using virtual currencies, which are currently minimal in comparison to standard monetary transactions. The Parliament concluded that "competent authorities should be able to monitor the use of virtual currencies in order to identify suspicious activities." How the wider digital currency world will react remains to be seen, but this perspective is likely to cause some backlash among proponents of unregulated and anonymous cryptocurrencies.