Is the U.K Going Overboard With Proposed AML/CFT Laws for Crypto?

Wilfred Michael 

Wilfred Michael

News reporter

11 June 2019,
09:32
Is the U.K Going Overboard With Proposed AML/CFT Laws for Crypto?

Finding a balance between regulating the crypto industry and allowing the emerging technology to thrive was the primary message behind a recent comment sent to Her Majesty’s Treasury last week by the crypto advocacy group, Coin Center.

Coin Center was writing in response to a consultation paper released by the regulatory body earlier this year.

In that paper titled ‘“Transposition of the Fifth Money Laundering Directive,” Her Majesty’s Treasury disclosed its plans to broaden the EU’s guidelines for applying anti-money laundering/countering the financing of terrorism (AML/CFT) regulations to the crypto industry.

Explicitly, Coin Center expressed concerns regarding Her Majesty’s Treasury’s proposal to impose user “data collection and reporting requirements on not only cryptocurrency developers, but all open-source software developers and others who facilitate the peer-to-peer exchange of cryptoassets.”

The response noted that by enforcing such regulations on the industry, the U.K would violate existing laws regarding citizens’ free speech and privacy rights.

Instead of imposing such burdensome data requirements on almost every participant in the crypto industry, Coin Center recommended that Her Majesty’s Treasury emulates the example set by regulators in the United States.

As noted by Coin Center, guidance provided by the U.S Treasury Department’s Financial Crimes Enforcement Network (FinCEN) imposes data collection and reporting requirements only on crypto platforms that have “independent control over the fiat and cryptoassets of their customers in order to transmit those valuables on their behalf.”

That distinction, thus excludes open source software developers, multiple-signature service providers, and decentralized exchange operators from those reporting requirements.

Meanwhile, Coin Center’s comments call to mind similar remarks made by Candian cryptocurrency exchange, Kraken, regarding proposed laws for trading platforms in the country. Kraken had argued that subjecting crypto exchanges to securities law because they store client’s assets “is both unnecessary and inappropriate.”

 

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