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article imageEurope to crack down on Bitcoin anonymity

By David Goehst     Feb 5, 2016 in Business
In the aftermath of the horrific Paris attacks, The European Union is poised to roll out legislation that would make virtual currency platforms perform tighter due diligence during exchanges while concurrently enforcing EU’s anti-money laundering laws.
New legislation will soon head to Parliament directed towards the prohibition of bitcoin anonymity, which is historically linked to terrorist cells and other nefarious activities which lead up to world incidents like the Paris attacks.
There’s no other explanation other than terrorism.
In an EU college read-out letter, prepaid debit cards and virtually all forms of foreign exchanges of funds, including wire transfers and ‘odd’ precious metals transactions, would be watched closely for patterns linking known organizations together.
Bitcoin regulation was written in the stars
After enduring an unexpected but publicly welcomed growth spurt, Bitcoin became an imminent target of scrutiny by many compliance officers in financial arenas around the world. Trading the virtual currency is especially attractive in the looser banking regulation countries around Europe.
Ever since its association with Silk Road was unveiled, Bitcoin has been treated as just another terrorist propaganda tool and finance method. Bitcoin is also associated with the collapse of Mt. Gox, meaning a lack of consumer and investor protection exists at the moment. Hawala, another nefarious money transfer system, has bred its own reputation of duplicity with compliance authorities due to its association with deceitful behaviors, namely money laundering and terrorist funding on a much smaller scale.
Safeguards are already in place for licensed institutions such as the oft scrutinized banking industry. The FATF has a provision establishing that know your customer (KYC) requisites for some wire transfers (those below a “de minimis” threshold, i.e., $1,000 USD) can be skipped. But for unlicensed individuals, such as those exchanging bitcoins, there appears to be no such “de minimis” exemption. In the U.S., this was explicitly made clear when director James H. Freis stated: “An entity that engages in money transmission in any amount is subject to the BSA rules.”
With the Grecian bank failures and historic Parliament votes due later this year, it’s pretty safe to assume Bitcoin regulation will end up being voted on some time soon.
Forex trading may see heavier regulation, too
Forex traders tend to listen to central banks like the Reserve Bank of Australia (RBA), mostly because they're in a unique position to influence interest rates. Although legitimate forex traders may have their say in court, the next massive media frenzy in the forex industry will be long-overdue interventions from central banks and governments, mainly those NATO countries that have the largest controlling interest during wars. That’s not to say forward-thinking forex trading strategies won’t roll out to evade regulations, although it’s highly unlikely anything is brewing.
The Bank of Baroda recently ran an internal audit due to forex trading irregularities discovered a few months prior. Egypt put a cap on forex deposits for certain incoming goods. And numerous regulatory proposals have targeted those trading in global currencies to help thwart those interested in funding ISIS or other renegade groups.
Regulations of both bitcoin and foreign currency exchanges are impending, although specific timelines for legislative action have yet to be determined.
More about bitcoin, terrorist funding, Eu
 
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