EU Establishes New Rules for Cryptocurrency Exchanges to Reduce Illicit Activities

The European Union's governing body came to an agreement on new rules that will affect cryptocurrency operators in the region.

Leaders within the European Union reached an agreement last Friday on the regulation of exchanges with the aim of preventing money laundering and terrorist-related activities using Bitcoin and its ilk, according to a report by Reuters on a statement from the governing body.

“Today’s agreement will bring more transparency to improve the prevention of money laundering and to cut off terrorist financing,” said Vera Juorova, the European Justice Commissioner.

The measures that will pass came as part of a full package of new laws meant to put a cork in financial crimes and tax evasion. Some of these regulations were also about pre-paid cards and trusts.

As far as Bitcoin and other cryptocurrencies are concerned, the EU wants to de-anonymize the market as much as it can.

Like we’ve seen in other countries, the new agreed-upon measures will force exchanges to gather identifiable information about their users, making it virtually impossible to use them without any sort of proof of identity.

However, there is one particular aspect about these measures that is unique, at least for now: The EU also wants “wallet providers” (i.e., organizations that develop applications like Bread and Electrum) to follow these requirements.

It’s unclear how the EU will regulate this, especially when some wallet developers do not operate under its jurisdiction.

All of these measures will come into effect within the next 18 months.

A few months ago, the EU announced the passing of MiFID 2, a set of sweeping regulations for the European securities markets that will come into effect in 2018.

Any exchanges and hedge funds operating in the crypto space will have to comply with its rules, including some that are meant to encourage a digital revolution in reporting on trade.

With these new measures and MiFID 2 coming along over the next year, the cryptocurrency market in Europe will have to do a significant amount of homework and even possibly re-vamp their operations to fit the governing body’s desired model.