Crypto Firms Close Doors as Regulation Ramps Up
According to industry outlet The Block, a number of crypto startups are closing operations as the MLD5 European Union regulation, regulation that mandates firms operating in the region to implement anti-money laundering (AML) and know-your-customer (KYC) procedure, is slated to come into effect early next year.
SimpleCoin, a mining pool, wrote the following on its website:
“When the laws come into effect, we would be forced to require you, the users, to identify yourselves for anti-money-laundering purposes. Mining should be available to anyone and we refuse to jeopardize our users’ privacy.”
A closely-affiliated site, Bitcoin gaming outlet Chopcoin. will also be shut down due to the implementation of the AMLD5 law.
This comes shortly after BottlePay, a prominent cryptocurrency startup that allowed individuals to pay Bitcoin to each other via social media in an easy manner, announced that it will be closing its doors on Dec. 31, as the new regulations would “alter the current user experience so radically, and so negatively, that we are not willing to force this onto our community.”
Seems Like U.S. Will Follow
While the E.U. seems to be the only jurisdiction in which AML laws are being pushed especially hard at the moment, cryptocurrency companies (and companies in general) may soon have to oblige by similar anti-money laundering rules in the U.S., which arguably hosts a larger Bitcoin and crypto following and industry than many countries in the Union.
IRS Criminal Investigation Chief John Fort was cited in a recent Bloomberg Law report as stating the following:
“We’re looking at those, and the ones that may or may not be connected to bank accounts […] In other words, if you can walk in, put cash in and get bitcoin out, obviously we’re interested potentially in the person using the kiosk and what the source of the funds is, but also in the operators of the kiosks.”
Fort added that Bitcoin ATM operators are mandated to “abide by the same know-your-customer, anti-money laundering regulations.” He added that current operators are operating these kiosks with “varying levels of adherence to those regulations.”
There’s also FinCEN, a branch of the Treasury, that has recently started to hint at impending rules for the crypto space. Director Kenneth Blanco said that cryptocurrency firms are not above AML laws.
Firms dealing with digital assets, he remarked, are still subject to the Bank Secrecy Act, “whether you are a stablecoin, centralized, decentralized crypto.” He asserted that this has to be the case due to the potential that individuals on the other side of cryptocurrency transactions might be “dealing in some kind of illicit activity,” be it “opioids or human smuggling.”