European Union Straightens Regulations For Crypto Service Providers


A new European Directive has come into effect. The 5th Anti-Money Laundering Directive (5AMLD) aims to bring transparency to financial transactions by combating money laundering and terrorist financing across Europe. 

According to the fact sheet published by the European Union, the new directive will: 

  • Improve transparency on the real owners of companies
  • Improve transparency on the real owners of trusts
  • Interconnection of the beneficial ownership registers at EU level
  • Lifting the anonymity on electronic money products (prepaid cards) in particular when used online
  • Extending Anti-Money Laundering and Counter-Terrorism financing rules to virtual currencies, tax-related services, and traders in works of art
  • Broadening the criteria for assessing high-risk third countries and improving checks on transactions involving such countries
  • Setting up centralized bank account registers or retrieval systems
  • Enhancing the powers of EU Financial Intelligence Units and facilitating their cooperation
  • Enhancing cooperation between financial supervisory authorities

How Will The Directive Affect Crypto Service Providers

The 5AMLD Directive will affect all crypto providers in Europe. Many businesses will be forced to shut down due to the extensive know-your-customer (KYC) and anti-money laundering (AML) practices that this new law calls for. These types of processes can be very expensive and not all crypto service providers can afford it. Just after the directive came into effect this week, the UK-based crypto wallet provider Bottle Pay announced its decision to cease operations. According to the announcement:

As we are a UK based custodial Bitcoin wallet provider, we will have to comply with the 5AMLD EU regulation coming into effect on January 10, 2020. The amount and type of extra personal information we would be required to collect from our users would alter the current user experience so radically, and so negatively, that we are not willing to force this onto our community.

The company shuts down after having raised $2 million in seed funding just a few months back. It appears the European Union is now focussing more of its efforts in crypto-related regulation establishing a new set of rules that companies must follow if they want to offer their services in the region.

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