The European Commission published proposals to amend the 4th Anti-money Laundering Directive, to bring crypto-currency exchanges and wallet providers within scope, in early July 2016. The European Banking Authority criticized those proposals in August, and the UK Treasury’s response of September suggests that it was also unimpressed. But the European Central Bank has responded more positively.
In particular, it:
- “strongly supports” the Commission’s proposal to make exchanges and wallet providers “obliged entities” for anti-money laundering purposes;
- urges the EU’s legislative bodies to “take care not to appear to promote the use of privately established digital currencies“;
- stresses that “the euro is the single currency of the Union’s economic and monetary union“;
- only makes 2 substantive recommendations:
- “virtual currencies [should be defined] more specifically, in a manner that explicitly clarifies that virtual currencies are not legal currencies or money...”, they’re “a means of exchange“, not “a means of payment“. The ECB therefore recommends that “virtual currencies” are defined as “a digital representation of value that is neither issued by a central bank or a public authority, nor attached to a legally established currency, which does not possess the legal status of currency or money, but is accepted by natural or legal persons, as a means of exchange and possibly also for other purposes, which can be transferred, stored or traded electronically“; and
- the words: “The credibility of virtual currencies will not rise if they are used for criminal purposes. In this context, anonymity will become more a hindrance than an asset for virtual currencies taking up [sic] and their potential benefits to spread [sic]. The inclusion of virtual currency exchange platforms and custodian wallet providers will not entirely address the issue of anonymity attached to virtual currency transactions, as a large part of the virtual currency environment will remain anonymous because users can also transact without exchange platforms or custodian wallet providers” should be deleted from recital (7) to the Commission’s proposed Directive, amending the 4th Anti-money Laundering Directive, presumably because they may appear to promote the use of private digital currencies.
The ECB’s Opinion was prepared at the request of the European Parliament and Council. They are still to respond.