Since the inception of Bitcoin, Governments have been left with the question of how to manage and regulate digital currencies. In the EU, the stance has always been to learn more and wait. However, this week could mark a change in thinking after the European Commission proposed an amendment to its AML Directive. The proposed reform could see digital currency users tracked, with their details held on a database. Therefore, anonymity in cryptocurrency use could become a thing of the past.
What is AML?
For anyone not familiar with the legislation, AML stands for Anti-Money Laundering Directive. The purpose of the legislation is to prevent money from funding illegal activity. The AML directive sets out guidelines for financial institutions, ensuring that their internal processes are set up to prevent money laundering. It provides examples of red flags and the subsequent steps to take, should suspicious activity arise.
Proposed AML reforms will endeavour to ensure that cryptocurrencies are legally recognised as money and would prompt the creation of a database to link user IDs to their respective wallet. As a result, transactions would become traceable. It is unclear at the moment whether the EU plans to hold all information on a central database or whether the task would be segmented by jurisdiction.
How will this affect my Scotcoin?
Providers of digital currency wallets- which we will be in the very near future- would be required by law to ask all European users to register with their real information. This data must then be made available to financial intelligence agencies, should they require it. The talks come after many cases of money laundering have been thrown out of court due to the fact the defendant’s use of digital currency did not contravene current law.
So, how do we feel about this proposed legislation change? At Scotcoin, our aim has never been to actively or passively assist anyone engaging in illegal activity. Therefore, should the proposed AML directive reform become law then we will welcome the change. The overall aim of the legislation to discourage people from using our channels to fund illicit activity such as terrorism and/or tax avoidance. Scotcoin was not created to be used as such and so we will comply with any EU changes fully if/when the time comes.
Given the recent vote for Britain to leave the EU, it could be the case that Scotcoin is never regulated as such. The European Parliament has stated that it will vote on the proposed changes before 2016 is out. However, we are all aware that regulation changes take time to pass through any parliament. Therefore, it could be some time before new laws are enforced. By which point, Brexit may have already occurred.
Scotcoin is, as we all know, a Scottish cryptocurrency. Scotland is in flux at the moment, with a huge push taking place for independence. So, where Britain goes, Scotland may not follow. With this in mind, we are still paying very close attention to the conversations taking place in the European Parliament. Anonymity was just one of the many benefits held by digital currencies such as ours. We firmly believe that Scotcoin is strong enough and provides a significant number of user features that the proposed changes will not impact its success