A lawyer currently studying for an MSC in Law and Finance at Oxford University, who specializes in cryptocurrencies and the laws surrounding them, has recently released comments on a section of a new European Commission proposal which has been overlooked by many but which could have a huge impact on cryptocurrencies worldwide. This article looks further into this proposal and its implications on cryptocurrencies as a whole.
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The European Commission proposal in question is a plan to take the laws which currently only apply to national currencies and apply them to cryptocurrencies as well. This mainly includes things such as EU anti-money laundering regulations and counter-terrorist regulations and could be applied to all cryptocurrencies as well as the digital wallet providers (of which there are many).
The main purpose of this proposal and its actions is to discourage and prevent terrorist actions, and the overall proposal has come as no surprise. There has been a strong call for this legislation to be introduced for years now, and there was a particularly strong push for it after the tragic terrorist attacks in Paris over the last year. However, as well as this popular proposal, the EC also presented another one that wasn’t publicized anywhere near as much. This linked proposal suggests that the licensing and supervision rules set out in the Payment Services Directive should be applied to cryptocurrencies. The intention of this proposal is to “promote better control and understanding of the market” according to the EC.
The implications of this proposal might not seem particularly import, hence why so many people have overlooked it. However Jacek Czarnecki, the lawyer currently studying at the University of Oxford, has pointed out that if this proposal were to be adopted then cryptocurrencies would have to be officially recognized as a legal currency by all countries in the European Union. Currently the Payment Services Directive can only applied to anything it defines as a form of “funds” which at present includes cash, bank money (online transactions), and e-money. However cryptocurrencies do not fall under any of these categories, so they would have to be added meaning a big change in the way that Governments would have to view them.
This could be a big boost to cryptocurrencies, however Jacek Czarnecki has also pointed out that this could open the door to cryptocurrencies having to comply with much stricter regulations, potentially differing from country to country which could significantly damage their reputation and their usefulness. The proposal is currently very vague and is still only a proposal, but this situation could be kept under a close watch in case of any significant developments in the near future, particularly for companies who may be affected by any changes in cryptocurrency regulations.