[2019-12-18] Two more bitcoin firms shutdown over impending EU money-laundering

[bbc.reporter]

I reckon that this is only the beginning. Malta, where many of the exchanges are based will be required to report their users' data to financial intelligence units under AMLD5.

In any case, what really is AMLD5 and why are smaller cryptofirms shutting down because of it?



Two more firms - cryptocurrency mining pool Simplecoin and bitcoin gaming platform Chopcoin - are shutting down over the AMLD5 European Union regulation coming into effect Jan. 10, 2020.

A notice on the Simplecoin website reads that it is closing down on Jan. 1 because the new rules will require the firm to implement several anti-money laundering (AML) know-your-customer (KYC) requirements and it is against those to protect users' privacy.

“When the laws come into effect, we would be forced to require you, the users, to identify yourselves for anti-money-laundering purposes. Mining should be available to anyone and we refuse to jeopardize our users’ privacy,” said Simplecoin.

Another firm, bitcoin gaming platform Chopcoin, also co-founded by Grieger is shutting down for the same reason. AMLD5 imposes more stringent reporting obligations for cryptocurrency firms and authorizes Financial Intelligence Units to obtain the addresses and identities of cryptocurrency owners and users.

Read in full https://www.theblockcrypto.com/post/50613/two-more-crypto-firms-shutting-down-over-impending-eu-money-laundering-rules

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[CryptoBry]

This is akin to adopt or go away order from the government of EU. And all member nations have to comply, there is no ifs and no buts. In a way, this is the regulations that the industry is partly clamoring for but many are of course complaining about because the anonymity factor will now be gone. Sooner we will realize that this is just another damn-if-you-damn-if-you-don't kind of thing and firms or units who could not contain the heat will certainly go down or transfer somewhere else where the influence and power of EU is not existing.  I am not sure though but even if one is not based in EU but accepting business from citizens under EU still have to be complying with the law. Let's see how can this be affecting the whole cryptocurrency industry...will it withered them or will this make them stronger?

[joelsamuya]

One of the many things a business has to realized is that governments will really exercise its regulating and taxing power whenever they wanted to and at their convenience. Now, with that as the reality that we have to consider, a business has to make sure that it can survive the travails of the times by adopting to these realities or shield itself from possible harm by relocating. I think this would be what crypto-related businesses under the banner of EU are thinking right now. With Binance headquartered in Malta, I am wondering how this can be affecting the platform or is Binance already resigned to the fact that they must be fully cooperating with the government to stay afloat in this harsh environment?

[Theb]

The solution is already their for both Simplecoin and Chopcoin all they have to do is to comply with the KYC requirement and they won't be forced to shut down their services. Even their users are reported to be more than willing to undergo KYC so that they would still be running but both Simplecoin and Chopcoin are firm with their beliefs and has seen no good alternatives to continue their service just because of this new requirement which for the eyes of any user/client is a selfish thing to do. Both users and developers must widely accept that anonymity in this industry isn't viable anymore when the government started to be more concerned with the industry and we must be prepared to sacrifice it for the continuity of any project, crypto, and the whole market.

[alani123]

Regulation can't stop businesses from moving in territories it doesn't apply to. It also can't stop residents where it applies to to stop using those online businesses. Online blocks are so easily circumvented. All bad regulation will do is drive businesses and revenues away... If those websites wanted to continue operations they could. perhaps they will. maybe it's a legal requirement to rebrand.

[Theb]

Regulation can't stop businesses from moving in territories it doesn't apply to. It also can't stop residents where it applies to to stop using those online businesses. Online blocks are so easily circumvented. All bad regulation will do is drive businesses and revenues away... If those websites wanted to continue operations they could. perhaps they will. maybe it's a legal requirement to rebrand.

Not exactly the AMLD5 is built around the security of the EU against crimes related to countries outside of it so I wouldn't be surprised if these acted out like what the US has been doing for overseas operation just like what they did to Binance where we have seen it exit out from the US. Also the AMLD5 is said to be stricter to particular developing countries which they consider a high financial risk so maybe we can expect sites being blocked coming from this countries. And like what I have said earlier both Simplecoin and Chopcoin are given a choice to follow the new requirements and even them has not seen any loopholes for the upcoming regulation.

[Lucius]

The new regulation is much stricter than the previous one, and the current view is that any crypto transaction will need to identify itself with the actual user. By this, I mean that some limits that were directed to buying/selling up to a certain amount will no longer be anonymous. It's not just about mining, but everything that is related to cryptocurrency, and that includes even faucets. Main micro wallet FaucetHub has ceased operations, and some new players are also in trouble and require verification of their users so they can continue to use the faucets.

I am not sure how new AML5 treats buying things with crypto, but things are likely to get tighter in the area as well. An easy way to launder money or not pay taxes is to buy something directly for BTC and then sell it for fiat.

[gentlemand]

I haven't heard any of the major exchanges, or anywhere really, mention this. Presumably that means they've taken it in their stride? If it's that onerous and that soon I expect to have heard a great deal more about it than I have.

[Harlot]

I haven't heard any of the major exchanges, or anywhere really, mention this. Presumably that means they've taken it in their stride? If it's that onerous and that soon I expect to have heard a great deal more about it than I have.

By my understanding of the news some of their big exchanges have either complied to the KYC requirements a long time ago or isn't affected with what they are asking. The only ones who are seriously affected are these services who promote anonymity in their services and they still have the option to comply but they feel like anonymity is more important rather than the survival of their service. So really the ones closing are hard headed people who still think that being identified by the givernment in the crypto market is bad.

[malevolent]

By my understanding of the news some of their big exchanges have either complied to the KYC requirements a long time ago or isn't affected with what they are asking. The only ones who are seriously affected are these services who promote anonymity in their services and they still have the option to comply but they feel like anonymity is more important rather than the survival of their service. So really the ones closing are hard headed people who still think that being identified by the givernment in the crypto market is bad.

Asking a company to force its users to undergo KYC even when not dealing with fiat currencies in any way is crazy, with AMLD5 a mining pool and a faucet with some cryptocurrency-based games would also need to ask its users to provide selfies and dox. Since there's ample competition from countries without such ridiculous laws, the logical step is to shut the businesses down (I assume they ran it as legal businesses so far in their own name, so they can't continue running without complying with the new directive).

[alyssa85]

I haven't heard any of the major exchanges, or anywhere really, mention this. Presumably that means they've taken it in their stride? If it's that onerous and that soon I expect to have heard a great deal more about it than I have.

Kraken used to allow you to just trade with a name, address and email, but about a year ago required uploading ID and proof of address and your occupation.

So there has been a tightening of KYC requirements for anyone in the EU across all the exchanges.

[1Referee]

Kraken used to allow you to just trade with a name, address and email, but about a year ago required uploading ID and proof of address and your occupation.

I believe it was about the same time Coinbase stopped allowing people to use their 'wallet' functionality without KYC. Coinbase that way trapped tens of thousands of people inside their ecosystem without offering them any time to withdraw their coins before verification becomes mandatory. It was forced upon people, which is a nasty move.

Not sure how Kraken handled their transition to become a full KYC platform, but at least allow people some time to withdraw their funds if they don't want to dox themselves to an exchange.

[LeGaulois]

If it can make you feel better, even the banks in Europe are struggling to comply with these new directives. Administrations have not stopped giving them additional delays.

AML5 or KYC is a real nightmare to implement in ecosystems already well established. So many drawbacks in Europe for a company.
It's what we call putting sticks in the wheels to prevent pedaling.
I'm sure that if they continue to be so annoying we will see a trend of an exodus of companies that will prefer to go elsewhere, where they will not be so annoyed. And it's quite understandable from a business point of view

[figmentofmyass]

The new regulation is much stricter than the previous one, and the current view is that any crypto transaction will need to identify itself with the actual user. By this, I mean that some limits that were directed to buying/selling up to a certain amount will no longer be anonymous. It's not just about mining, but everything that is related to cryptocurrency, and that includes even faucets. Main micro wallet FaucetHub has ceased operations, and some new players are also in trouble and require verification of their users so they can continue to use the faucets.

does this apply only to EU-based operations? or also to offshore companies that serve EU customers?

i've seen surprisingly little discussion about the exact consequences this will have for the industry. i've just seen that a few EU-based companies are shutting down and deribit (the netherlands) are implementing KYC. i'm hoping exchanges like binance, bitmex, kucoin, etc will hold the line and stay KYC-free. binance is based in malta so i'm wondering if they'll jump jurisdictions soon as they have so many times before.

[malevolent]

I'm sure that if they continue to be so annoying we will see a trend of an exodus of companies that will prefer to go elsewhere, where they will not be so annoyed. And it's quite understandable from a business point of view

Problem is, sooner or later other countries will start getting pressured to adopt these new regulations, too, both overtly and covertly (if it hasn't already started).

[Lucius]

does this apply only to EU-based operations? or also to offshore companies that serve EU customers?

i've seen surprisingly little discussion about the exact consequences this will have for the industry. i've just seen that a few EU-based companies are shutting down and deribit (the netherlands) are implementing KYC. i'm hoping exchanges like binance, bitmex, kucoin, etc will hold the line and stay KYC-free. binance is based in malta so i'm wondering if they'll jump jurisdictions soon as they have so many times before.

I cannot say with certainty how this will affect companies like Binance, but Malta is a full member of the European Union and I don't see how it could stay out of reach of AMLD5. If they want to do business within the EU, they will need to adjust to a new directive. It's not just AMLD5, but also AMLD6 directive which brings 5 more amendments and has yet to enter the approval process of EU member states.

European lawmakers seem to have decided to deal with every form of anonymity in the financial business, which is likely to cause some companies to change their place of business.

[squatter]

Malta is a full member of the European Union and I don't see how it could stay out of reach of AMLD5. If they want to do business within the EU, they will need to adjust to a new directive.

There have been rumors floating around since the beginning of the year that Binance might be planning to leave Malta. It sounds like it's not just a question of leaving Malta, though. Any company serving EU residents will need to implement KYC now?

If that's the case, I'm surprised we haven't heard more from exchanges. I hope we don't see a rash of hastily added KYC policies next month.

[bbc.reporter]

I haven't heard any of the major exchanges, or anywhere really, mention this. Presumably that means they've taken it in their stride? If it's that onerous and that soon I expect to have heard a great deal more about it than I have.

They might be taking it in stride not to hesitate in giving their users' private data to anyone that demands it under law hehe.

[Lucius]

Any company serving EU residents will need to implement KYC now?
If that's the case, I'm surprised we haven't heard more from exchanges. I hope we don't see a rash of hastily added KYC policies next month.

I think there can be no exceptions, the laws will apply to anyone doing business in the European Union. There are three options, adjusting to new laws, terminating your business, or moving to another country. Although running away from the law only delays the inevitable, as there are fewer and fewer locations to work in the financial sector without KYC.

Binance already has a branch that operates under the mandatory KYC (https://www.binance.je/en), so it is very possible that they will simply introduce KYC to Binance Europe, and give some time to everyone to do it or withdraw their funds. However, there are some minimum amounts that will be allowed under the new directive (50-150 EUR), so you may still be able to trade small amounts without KYC.

[darkangel11]

On one hand this is stupid because if they aren't allowing people to exchange coins to fiat money they shouldn't undergo AML regulations because no laundering can take place.

On the other, since they are required to do KYC anyway, they could add an exchange options to their services. Now they can offer cloud mining, pool mining, and so on, with an option to exchange mined coins to fiat on site, making it faster and easier for their customers. It's important to find silver lining and adapt.