BERLIN: If the European Commission confirms the requests France and Germany to regulate digital currencies, bitcoin startups and investors will be negatively affected, and may possibly be required to provide sensitive financial and user data to government agencies for inspection.
French Federal Finance Minister Wolfgang Schaeuble and former minister of social affairs Michel Sapin have proposed a set of financial measures to the European Commission, to urge the control of bank accounts and digital currencies.
Over the past few months, European nations including Germany and France have begun to express their concerns towards the “anonymity” of digital currencies such as Bitcoin and Ripple, and their involvement in “financing of terrorism.”
Due to the increase in the use of bitcoin in purchasing illicit goods on the dark web and hacking attacks, Germany and France have been pressuring the EU Commission to implement improvised policies to control electronic and anonymous payment systems.
“Although much of the evidence is still anecdotal, concerns have been expressed by LE and financial experts in the wider international environment that commercial CSE online, among other criminal activities, is moving to a new unregulated, unbanked digital economy. Payment mechanisms providing a certain degree of anonymity are always open to abuse by those with criminal intentions, as developments in the use of Bitcoin show,” reads a section from a report of the European Commission.
The federal government of Germany has already taken the necessary procedures to file an official proposal regarding the reform of the Customs Administration Act, to allow the customs to monitor cross-border cash movements and electronic money such as bitcoin transactions.
However, government officials of Germany haven’t disclosed the methods that will be implemented in revealing digital transactions and settlement of electronic money. In essence, the German government is attempting to regulate bitcoin transactions by classifying them as a form of cash movement and possibly demand tax payments per each transaction.
Regardless of Germany’s strategy to regulate bitcoin transactions, president of the committee on finance of the French Senate Philippe Marini and the rest of the committee on finance of the French Senate classify bitcoin as an anonymous payment system, which provides big opportunity for money laundering.
“Most importantly, the fact that bitcoin transactions are anonymous makes the system a big opportunity for cybercrime and money laundering. On the 15th January public hearing, we were told that the Customs had arrested a drug trafficker who asked for payments in bitcoins. Of course, the website The Silk Road, the biggest online shopping center for drug dealers and weapon seekers, was shut down by the FBI at the end of 2013. But closing the website does not eliminate the risk: on 28th January 2014, the vice-president of the Bitcoin Foundation was arrested in New York and charged on money laundering.” said Marini.
It is still difficult to speculate whether the improvised draft of the Customs Administration Act and France’s proposal to implement heavier regulations on digital currencies will be processed. If the European Commission confirms the requests of these two nations, bitcoin startups and investors will be negatively affected, and may possibly be required to provide sensitive financial and user data to government agencies for inspection.