EU Update on Application of Enhanced Due Diligence to VC Exchanges


Bitlegal has been in communication with the EU commission surrounding the regulation of digital currency exchanges under 4AMLD.

We have been concerned that the requirement from FATF that enhanced due diligence measures (EDD) be conducted on ALL transactions involving convertible decentralised digital currency would be transposed into 4AMLD, imposing a default requirement on VC exchanges (see here) and therefore placing them at a competitive disadvantage compared with other regulated operators.

The current response from the EU Commission is that ā€œthere may be circumstances of heightened risk where it may be legitimate and appropriate to require the application of Enhanced CDD, but not as a default optionā€. This is an encouraging sign but more detail is required.