EU Ministers Jittering over Bitcoin After Paris Attacks

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European Union member states plan to “crackdown” on digital currencies, anonymous payments and pre-paid cards in effort to combat terrorism financing in the wake of the Paris attacks, according to a draft memo shown to Reuters.

EU justice and interior ministers are holding a crisis meeting in Brussels today, arranged in response to the bloodshed in Paris.

The ministers will call on 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.”

American and European security agencies have reported that bitcoin is often used by the Islamic State (IS), other terrorist groups and criminal organizations to transfer funds around the world, as it is useful for moving funds via the Internet anonymously and quickly.

Some bitcoin community members and government officials are downplaying the Reuters story on the EU draft memo.

Jerry Brito, the Executive Director of the advocacy group Coin Center, point out that digital currency networks do not pose any greater threat of being used by criminals and terrorists than other financial networks.

Brito also indicate that media outlets like Reuters are exaggerating the significance of the EU memo. Brito noted:

The EU memo cited in the article under the “crack down” headline merely states that the European Commission will be asked to propose measures 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.” Broadly strengthening AML/KYC controls might be appropriate and hardly constitutes a crackdown.

Indeed, the head of the U.S.’s anti-money-laundering agency, Jennifer Shasky Calvery, informed reporters at an American Bankers Association conference this week:

There has been public reporting of connections of ISIL promoting the use of bitcoin and virtual currencies as a means of moving and raising funds, but I think we are also very focused on the traditional means of moving funds so I think we need to keep our focus on both areas. I wouldn’t say that it is higher risk.

The UK Treasury recently published the UK national risk assessment of money laundering and terrorist financing, with traditional banks having the highest vulnerability score and digital currencies actually having the lowest score on the list of methods.

Brito adds that a crackdown on digital currency would only serve to drive out legitimate players, but that after such crises overreaction by jittery officials often occurs, and thus education by the bitcoin community is important.

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By Hans Lombardo, AllCoinsNews.com