In the purported interest of keeping people safe, the European Commission wants to make us all easier to find. In an announcement released today, the EU’s executive body says it wants to stop the anonymous use of virtual currencies like Bitcoin in order to improve security.
Under the proposed rules, platforms offering virtual currency transfers would be brought under the scope of the EU’s Anti-Money Laundering Directive, which would force platform owners to request identifying details from customers before allowing them to process payments. This would effectively end the anonymity of virtual currencies.
The proposal also clamps down on anonymous pre-paid credit cards. Under the new rules, vendors offering pre-paid cards would be subject to more stringent requirements to verify the identities of their customers.
The Commission has justified its proposal with an appeal to national security. Commenting on the Commission’s plan, Vice-President Valdis Dombrovskis said:
We must cut offterrorists’ access to funds, enable authorities to better track financial flows to prevent devastating attacks such as those in Paris last year, and ensure that money laundering and terrorist financing is sanctioned in all Member States. We want to improve the oversight of the many financial means used by terrorists, from cash and cultural artefacts to virtual currencies and anonymous pre-paid cards, while avoiding unnecessary obstacles to the functioning of payments and financial markets for ordinary, law-abiding citizens.
However, there is very little evidence that terrorists use virtual currencies like Bitcoin to finance their activities. Last week, a Europol report concluded that there was no observable link between virtual currencies and terrorist financing, despite third-party rumours. In the report, Europol said, “Despite third party reporting suggesting the use of anonymous currencies like Bitcoin by terrorists to finance their activities, this has not been confirmed by law enforcement.”
Although the currency does not appear to be popular with terrorists, it remains a common sight in other areas of the internet that operate beyond the reach of the state. As Breitbart Tech editor Milo Yiannopoulos recently noted, Bitcoin remains the choice of “rebels and rogues” who want to evade government overreach.
For years, the Bitcoin economy has operated in relative freedom from the hand of state governments. With the EU’s proposals, that era may be coming to an end.