From Enthusiasm to Cooling: Paris Events Shift European Views on Bitcoin

While the European Union recently took steps to treat Bitcoin the same as other currencies, the attack in Paris also appears to have sparked a new round of discussion about the problem in Brussels.

According to Reuters, EU interior and justice ministers will propose a crackdown on electronic payments, digital currencies, and the anonymous use of prepaid cards at a meeting tomorrow (November 20), presumably to prevent these payment channels from being used as a means of financing terrorism.

The policy shift highlights the dilemma facing Bitcoin. Not only are mainstream consumers not tech-savvy, but the potential for people to use Bitcoin for criminal activity is unsettling authorities. Bitcoin was the primary payment method for purchases on Silk Road, a black market shopping site that the FBI investigated and eventually shut down. The anonymity that Bitcoin guarantees users is a major issue for regulators, and the New York Department of Financial Services removed that key feature from its guidelines when granting Bitcoin companies the status of digital currency companies.

Recently, former Federal Reserve Chairman Ben Benanke discussed the anonymity of Bitcoin in an interview with Quartz’s Matt Phillips, saying: “Anonymity is a feature of Bitcoin, but it is also a flaw in Bitcoin because in some cases it facilitates illegal transactions, drug sales, and the financing of terrorism, among other transactions. It is well known that governments do not want this kind of activity to occur, so I think there will be more government regulation and less appeals in transactions involving Bitcoin or similar currencies.”

A month before the Paris attacks, the UK Treasury assessed that there was a “low risk” that Bitcoin and other digital currencies would be used for money laundering or by terrorists trying to move money in and out of the UK.

But governments are still trying to figure out how to regulate the use of Bitcoin to protect consumers and establish rules to prevent money laundering.