It goes as a rule of thumb that tightening regulations in any economy tend to make businesses and Enterprises or even investors shun away from that sector of the economy or the economy in its entirety. This notwithstanding, it is sometimes essential and crucial for tight regulations to be put across to protect the economy or even to safeguard those operating within it. The reasons for such stringent measures range from encouraging factors to discouraging factors, all dependent on the direction and the objectives that the governing bodies want that economy to take.
Europe is gradually and in a segue manner tightening the rules for the crypto industry. Lately, the Union has introduced severe and strict regulations and requirements for companies operating in the crypto industry and for cryptocurrency users. These regulations are bound to make the cryptocurrency users feel its pinch within the next few months. Among the measures that have been implemented in the European Union include the obligation of member states to transpose EU fifth anti-money laundering directive AMLD5 to international law by January 2020.
German regulations chase out crypto companies.
The flagship of the European Union, Germany, is notably one of the first countries in the European Union to make the changes. The new anti-money laundering regulations are set to be enforced come next year and will require digital asset exchanges as well as providers of capital payment and custodian services to seek new licensing from the federal financial supervisory authority. The stipulated time within which they are supposed to do this is by the end of the year 2019 as per the new Pan-European legislation, which is set to be implemented in January 2020.
It is now official that starting from next year the German financial authorities will look at digital coins and consider them as a financial instrument. Whereas some are embracing the regulatory clarity regarding the status of cryptocurrency, many more believe that some more aspects also do need clarification. Some companies are even looking at the new rules as an obstacle to regular business in the crypto industry. Such moves by the government, they seem to believe, are geared towards hurting the German blockchain industry and opine that the resultant effect will be to send companies abroad and out of the country.
Among such major industry players Bitpay. The payment processor that supports both crypto and fiat transactions is no longer providing its services to German customers. Approximately a week ago, an announcement was made on Bitplay’s platform that it does not currently work with merchants or users based in the Federal Republic of Germany. Among countries affected by this are Bangladesh, Bolivia, Cambodia, Ecuador, Egypt, Indonesia, Iraq, Morocco, and even Vietnam.
Prague tightens the noose on the nascent crypto industry.
Report by local Media indicates that the Czech Republic is now working on its own set of rules, which work to tighten the regulations around the industry further. For instance, failing to register with the National Trade Licensing Office will lead to massive fines for service providers. It is notable that these measures have drawn inspiration from the latest European anti-money laundering directive. The country insists that the requirements set forth by the EU are only the start and that there will be even more stringent regulations to come. It says that doing so will increase oversight on a broader range of companies that are mandated by Brussels also if the move will jeopardize the competitiveness of the Czech crypto sector.
These are but a few among the many EU member states that are working to tighten, and make more robust the regulations governing the crypto space. It remains to be seen whether the move will facilitate the advancement of the crypto industry in the European Union or make the industry players pack their bags and close up shop in search for more accommodating countries elsewhere.