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EU will make Bitcoin traceable and ban anonymous crypto wallets in anti-money laundering drive

EU will make Bitcoin traceable and ban anonymous crypto wallets in anti-money laundering drive
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Cryptocurrency exchanges such as Binance, Coinbase, and Kraken may have to collect the details of people who send and receive cryptocurrency under New rules proposed by the European Commission.

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

“The aim of this package is to improve detection of suspicious transactions and activities, and to close loopholes that criminals use to launder illicit proceeds or finance terrorist activities through the financial system,” the commission said in a statement.

The proposed rules would require cryptocurrency exchanges to collect customer identification information, and bring it into line with Know Your Customer (KYS) rules already imposed on other financial institutions.

The new law will also create a new EU-wide Anti-Money Laundering Authority (AMLA) with oversight of cryptocurrencies by 2023.

How will 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 sector, forcing service providers such as crypto exchanges to conduct due diligence about their users.

This will bring crypto assets into line with bank transfers, and apply what is known as a travel rule to crypto transactions to make them traceable.

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

Anonymous crypto-asset wallets will also be banned under the new law – just like already anonymous bank accounts – in an attempt to transact with Bitcoin and other fully traceable cryptocurrencies.

coordinated framework

“These proposals are designed to find the right balance between addressing these threats and complying with international standards while not creating an excessive regulatory burden on the industry,” the European Commission said.

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

EU countries and the European Parliament have the final say on the proposals, which means it can take up to two years for them to become law.


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