Bitcoin is set to find new legitimacy in the European Union as member states agreed to force cryptocurrency exchanges within its jurisdiction to collect identification data on their users in an effort to prevent money laundering. Both cryptocurrency exchanges and online wallets operating in the European Union’s jurisdiction are now required to carry out the exact same know-your-customer (KYC) checks as traditional banks. The regulatory move comes as the European Union continues its widespread attack — which also sees changes and regulation affecting areas of finance and traditional banking — on money laundering and terrorist financing. As noted by Reuters, the increased transparency in regards to cryptocurrency trading and storage will almost certainly detract from major cryptocurrencies being used for illicit means, as KYC regulations will make it significantly easier for law enforcement to catch money launderers and terrorist financiers. As an added benefit, it should also make hackers’ lives more difficult should they target said exchanges and wallets. Of course, nothing is stopping European citizens from using cryptocurrency exchanges outside the reach of EU authority. Nevertheless, the world’s major cryptocurrency markets are moving in the same direction, with South Korea having already imposed KYC regulations on its exchanges and the United States expected to follow suit eventually. Though many in the cryptocurrency space aren’t particularly fond of KYC barriers, such data collection undoubtedly lends significantly more legitimacy to cryptocurrency than previously existed. One should also not take the EU’s new KYC requirements as an indication that the political and economic union is negative towards cryptocurrency. Rather, the continent’s alliance has been pushing to legitimize cryptocurrencies’ underlying technology in recent months. On April 10th, 22 countries in the European Union signed a Declaration on the Establishment of a European Blockchain Partnership, which is aimed at cementing Europe as a world leader in the development and launch of blockchain technologies. The international partnership claims to be “a vehicle for cooperation amongst Member States to exchange experience and expertise in technical and regulatory fields and prepare for the launch of EU-wide blockchain applications across the Digital Single Market for the benefit of the public and private sectors.” What do you think about KYC requirements? Do you think such regulatory measures legitimize Bitcoin and other cryptocurrencies? Be sure to let us know in the comments below! Images courtesy of Bitcoinist archives and Wikipedia Commons.
The European Union has brought in legislation requiring EU-based cryptocurrency exchanges and online wallets to carry out the same know-your-customer (KYC) checks as traditional banks in a move to prevent money laundering and the financing of terrorism. South Korea has already enforced KYC regulations on its exchanges and the US is expected to follow suit. The regulation is part of the EU's efforts to authenticate cryptocurrency technology. On 10 April the EU signed a declaration on the creation of a European Blockchain Partnership.