The European Union’s law enforcement agency Europol has reported that there is no evidence linking bitcoin to terrorism financing; however, the EU still sought for stricter rules on virtual currencies that include bitcoin in light of the rising terrorist threats and money laundering schemes. The stricter EU rules will seek to bring an end to the anonymity in digital currency exchanges and transactions.
The proposed rules will also impact on anonymous payments using prepaid cards. The European Commission which is the executive arm of EU is proposing to lower the threshold for identification when prepaid cards are used to make purchases from €150 to €250. The rule will also seek to widen the scope of verification requirements by adding the Know Your Customer procedures.
The proposal of the European Union will help national authorities in tracking down people who hide their financial information to commit crimes like terrorism. Member countries of the EU will be able to share critical information on the real ownership of companies and trusts that are dealing with digital currencies including those using prepaid cards.
The commission also proposes to bring digital currency platforms and custodian wallet providers under the authority of the Anti-Money Laundering Directive so as to prevent the misuse of digital currencies like bitcoin in financing terrorist activities and money laundering activities. Entities need to apply due diligence and control when virtual money is exchanged for real currencies to end the anonymity of such transactions.
However, the proposed rules have to gain the agreement of the EU’s member nations and the European Union Parliament before it is made into law. Last February the EU parliament has approved a proposal to install a bitcoin and blockchain centric taskforce to be overseen by the European commission. After the May 16 approval, the taskforce will study and understand all the risks and opportunities gained from the virtual currency technology.
Many people assume that Bitcoin miners are only concerned with making money through their computers. Bitcoin mining is not only about financial rewards from computation but to ensure decentralization and security of the network. Bitcoin technology is different because it includes a consensus mechanism to validate transactions.