Syed Rahman of financial crime specialists Rahman Ravelli considers the Commission's stance.
The European Commission aims to end cryptocurrency anonymity as part of its attempts to tackle money laundering.
Proposals introduced by the Commission's financial services commissioner Maireád McGuinness aim to improve the detection of suspicious transactions and activities and close loopholes used by criminals to launder illicit proceeds or finance terrorist activities through the financial system.
A major part of the proposals involves extending existing anti-money laundering regulation that applies to financial services to the entire cryptocurrency sector. This would mean that all cryptocurrency service providers would have to verify the identity of those sending and receiving transactions. Anonymous crypto asset wallets would also be prohibited under the proposals.
Ms McGuinness said: "Those involved in the cryptocurrencies space will now realise that anonymity is gone. The identity of all owners of virtual assets, senders or receivers of transactions would have to be verified by crypto service providers.
"This identifies who's sending, who's receiving, and it will allow us all to track suspicious transactions. Same activity, same risk, same rules. So in other words, we're just asking those who are engaged in the crypto sphere to be covered in the same way as their counterparts."
The proposals are understandable, given the desire to combat money laundering. But they touch on one of the biggest misconceptions in the fast-developing space that is cryptocurrency. While part of the appeal of cryptocurrency to those involved in wrongdoing is its anonymity, there are strategic tools available that can de-anonymise them. There are several remedies available in England and Wales to counter this issue.
Quite how the Commission proceeds from here remains to be seen. But the issue of anonymity and cryptocurrency may not be quite the problem it believes
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