New EU Proposal Seeks to End Anonymous Bitcoin Trading After Brexit

The European Union has been drawing up plans to crack down on tax avoidance strategies since a document scandal broke, in which leaked documents exposed the use of tax havens by the rich and powerful to hide their wealth.

The leak of a certain document is the most influential leak in history, with its impact far exceeding the WikiLeaks leak in 2010.

European Justice Commissioner Vera Jourova told the Financial Times:

"After the X documents incident, stricter transparency has become a priority."

Current EU transparency rules on shell companies and trusts have often been criticised for having too many loopholes, and the new drive seeks to close those gaps, particularly those that allow tax avoidance strategies.

The measures proposed by the European Union want to end anonymous trading on bitcoin exchanges and other virtual currency platforms. They hope to achieve this goal by requiring operators to carry out more customer checks (KYC).

The European Union has been adjusting for a long time regarding the regulation of Bitcoin exchanges and cryptocurrency platforms. For example, the European Central Bank and the European Banking Authority have also conducted their own digital currency research.

The EU has not yet legislated Bitcoin

In March, the European Parliament published a briefing on virtual currencies, which acknowledged that although there is currently no EU legislation on virtual currencies (including Bitcoin), these virtual currencies are not completely unregulated in member states. "In some member states, there is a patchwork of national legislation that is compatible to varying degrees, while in others there is no law at all," the report said.

The report also states: “Europe’s approach to regulating virtual currencies is fundamentally different from that of the United States. The former views virtual currencies as units of account, while the latter views them as commodities, and therefore the US regulation is more stringent.”

ECB recognizes the use of Bitcoin

In a letter to a member of the European Parliament, Mario Draghi, president of the European Central Bank, said that no virtual currency, including Bitcoin, has been declared legal tender in any country. However, he also confirmed that "virtual currencies can be used as contractual money when an agreement is reached between a buyer and a seller to accept a given virtual currency as a means of payment."

Britain was once a stumbling block for the EU

Other measures include forcing trusts to publicly reveal their true owners. Currently, many trusts are excluded from national registries of beneficial ownership. These registries emerged after the European Union enacted an anti-money laundering directive in December 2014.

In the past, the European Commission has put the tax treatment of trusts on hold, partly because of former British Prime Minister David Cameron, who argued in 2013 that trusts help British families manage their estates so they should be exempt from some rules.

However, now that the UK has voted to leave the EU, EU regulators have one less person to worry about. New proposals have suggested the EU is looking to end such transactions and increase regulation of bitcoin exchanges and cryptocurrency platforms.