Europe Introduces Customer Verification on Cryptocurrency Exchanges

Under “Closer Regulation”
Members of the European Parliament supported on Thursday an agreement reached with the European Council in December to bring cryptocurrencies under “closer regulation”. The decision was passed with 574 votes, 13 nays and 60 abstentions, the parliament’s press service announced. The agreement represents the fifth and latest update of the EU Anti-Money Laundering Directive. The amendments are intended to address “risks linked to virtual currencies”. To end the anonymity associated with them, cryptocurrency trading platforms and custodian wallet providers will be obliged to introduce customer due diligence controls, including identity verification procedures. In the future, these businesses will apply for registration in order to offer regulated exchange and payment services. The changes also target anonymity provided by payment card issuers. MEPs have approved the reduction of the threshold for identifying holders of prepaid and virtual cards – from the current €250 to €150. This will affect companies offering crypto to fiat conversion as part of non-custodial payment services.
Attempt at Coordination
The updated Anti-Money Laundering Directive will enter into force three days after its publication in the Official Journal of the European Union. Then, EU member-states will have 18 months to transpose the new rules into national law. They come to replace the lack of coherent policies regarding cryptocurrencies in Europe. Individual member-states have so far applied their own regulations or simply waited for a common legal framework. Crypto taxation in the European Union is also governed by uncoordinated decisions on national level. This year’s tax filing campaign came with tax rates varying widely between 0 to 50 percent. Some governments decided to apply their current tax codes in regards to crypto incomes and profits. Others have partially legalized cryptocurrencies in order to tax gains from crypto transactions.
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