The European Union (EU) is searching new ways to regulate cryptocurrencies. Some EU legislators have been working in order to impose tighter controls on Bitcoin and the cryptocurrency market. The intention is to fight terrorism, tax avoidance and organized crime by regulating the market.
The European Union – Controlling Bitcoin
With the new agreement, tax evasion and terrorism financing will be more difficult to perform through cryptocurrency exchanges. According to Věra Jourová, EU’s Commissioner for Justice, “today’s agreement will bring more transparency to improve the prevention of money laundering and to cut off terrorist financing.”
Exchange platforms and bitcoin exchanges (including wallets), will have to identify users. These new rules must be followed by the different European Union member states and legislators must turn them into laws.
The European Central Bank (ECB) has always been analysing the cryptocurrency market. Different countries, like Denmark or Estonia, wanted to issue their own cryptocurrencies. At CoinStaker we covered how the ECB was planning different regulations on the use of cryptocurrencies. Besides that, the ECB has forbidden countries to issue their own cryptocurrencies claiming that the Euro is the only currency of the EU.
“It is pre mature to consider them as a means of payment. The main worry is the potential fragility and side risks,” said Mario Draghi, ECB’s president.
This year, Bitcoin and the cryptocurrency market, have been growing exponentially. At the beginning of the year, the virtual currency market was worth $17 billion dollars. At the moment is heading towards $1 trillion dollars, after crossing $500 billion.
The last several years, terrorism was hitting the European Union. Different measures were taken but it was not enough to stop the attacks. Regulators are thinking that pre-paid cards funded with Bitcoin could be used by terrorists in order to fund the attacks.
Furthermore, the world is fighting against tax evasion and tax havens. One way to avoid governmental controls was through bitcoin and different cryptocurrencies. Any individual could take money out from a country without the governments to notice it and without paying taxes. At the moment, every single tax collected is valuable for states that are struggling to keep all the benefits for their society.
The Panama Papers and Paradise Papers raised concerns about how many influential celebrities and important enterprises were avoiding taxes.
“Flows of illicit money can damage the integrity, stability and reputation of the financial sector, and threaten the internal market of the Union as well as international development. Money laundering, terrorism financing and organized crime remain significant problems which should be addressed at Union level,” reads the Directive 2015/849 of the European Parliament and the Council.
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