European Union (EU) countries plan a crackdown on virtual currencies and other anonymous payments in an effort to tackle the financing of terror, according to a draft document seen by Reuters.
EU interior and justice ministers will hold a crisis meeting in Brussels on Friday, called in response to last Friday’s terrorist attacks in Paris.
They will urge the European Commission to “strengthen controls of non-banking payment methods such as electronic/anonymous payments and virtual currencies and transfers of gold, precious metals, by pre-paid cards,” the document said. In a memo dated two days ago, the European Commission said it is assessing whether digital currencies fuel terrorist financing and money laundering.
Bitcoin and other digital currencies can be easily moved across borders, typically in a fashion that keeps its users anonymous. The funds reside outside the control of banks or governments.
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The regulation of virtual currency has been on the European agenda already for several years. Progress has been limited, and most breakthroughs have pertained to how virtual currencies should be treated for VAT purposes.
While bitcoin’s potential risks, including terrorist financing and money laundering, have been periodically raised, there has been no urgency to take action. This all changes following the Paris attacks- the worst bloodshed in France since the second World War- which were carried out by the Islamic State of Iraq and Syria (ISIS).
The indication is that the EU nations do not propose any sort of ban of virtual currency, which due to its decentralized characteristics, is unlikely to be effective anyway.
Still, a marked change from the status quo is sought. EU ministers want “to curb more effectively the illicit trade in cultural goods,” the draft document said.
The news comes shortly after leaders of the G7 nations expressed suspicion that ISIS uses bitcoin to fund terror operations. They proposed tighter regulation of FinTech companies, such as those dealing in bitcoin, who help facilitate anonymous cross-border transfers of money.