By
Chimamanda U. Martha
November 23rd, 2023
EU ministers want the European Commission to propose controls on virtual currencies like Bitcoin. So far, it won’t happen in a little while, says the SWIFT Institute report.
In the wake of the latest terrorist attacks, the EU requests to regulate digital currencies in an attempt to stop terrorism financing. It was reported that ISIL, a terrorist organization responsible for bombings in Paris, is widely using Bitcoin for funding their operations, though this has yet to be proven.
Last week, the above-mentioned EU request was formalized at a meeting in Brussels, reports Reuters. According to a joint statement of the meeting, the ministers urged the Commission to “strengthen controls of non-banking payment methods such as electronic/anonymous payments, money remittances, cash-carriers, virtual currencies, transfers of gold or precious metals and pre-paid cards in line with the risk they present.”
The statement is nearly identical to that reported in the draft document, with the noticeable additions of money remittances and cash carriers. The final text also calls for measures to stop the illicit trade of cultural goods such as stolen art works, reads Finance Magnates.
However, a new research conducted by the SWIFT Institute states that The European Union won’t regulate the cryptocurrency in the nearest future.
According to the report, the revised Directive on Payment Services (PSD2) and the fourth European anti-money laundering directive (AMLD4) demonstrate not enough plausible arguments to include Bitcoin under the EU’s current legal frameworks. The report states:
” … recent legislative procedures – such as those for the AMLD4 and PSD2 – have not paid sufficient attention to this development, thus leaving virtual currencies largely untouched. While the AMLD4 could be construed to extend to virtual currencies, the precise degree to which will succeed in deterring their abuse for money laundering and terrorist financing purposes remains to be seen.”
In addition, the report reads about the way Bitcoin regulation has been seen in the USA. So, “financial regulators have already undertaken efforts at bringing certain virtual currency service providers – mainly the virtual currency exchanges – under the existing legal frameworks regarding money services business.”
“The regulatory approach followed in the US shows a number of clear similarities to the EU’s own legal framework on payment services. It could therefore be envisioned that an overhaul of the e-money framework would eventually lead to a similar legal regime for virtual currencies as what is currently proposed in the US.”
“This approach could also hold potential for other countries that are still struggling to grasp this matter, as can be seen in the Asian markets. Moreover, given then inherent international scope of virtual currencies, a more unified stance on this matter would serve to support international cooperation,” reads the report.