Europe’s largest cryptocurrency brokers, who would be the one that will be most burdened by the new crypto regulations, are calling for Transparency to remove perceptions that they’ll be involved in crimes such as money laundering. eToro Europe Ltd. and Bitpanda GmbH will be implementing cleared “know your customer” rules to allow trading platforms to go mainstream more smoothly, and eventually have digital currency used for institutional business.
Eric Demuth, co-CEO of Bitpanda, stated that they’d be happy to have regulations so they can know where they stand. He also revealed that he frequently has met with potential regulators from the Finance Ministry of Austria. He says he isn’t interested in moving their operations in loosely regulated jurisdictions such as Malta or Gibraltar, as things “don’t look good.”
The pursuit of transparency in the digital currency market is a bit ironic, as everything started out in secret back in 2009, but the value for crypto has now exploded to the tune of $800 billion. There are still countries where people can buy Bitcoin in special machines where they don’t have to show their ID and use the currency to buy everything, even stuff from the black market with virtually zero traces of their identity.
“This is all about where the burden of proof lies for anti-money-laundering, so asking for regulations seems very sensible. Even if you’re making a killing in trading, someone could come up with an unexpected piece of regulation that puts a big red line through your business plan,” said Marc Ostwald, global strategist at ADM Investor Services International.
San Francisco-based Coinbase managed to gain 20 million users while having strict documentation requirements from their clients. Japan’s supportive rules for digital currency has made them the world’s hub for the cryptocurrency. However, in Europe, the business is set to boom. Numerous brokers admit that getting an institutional customer is almost impossible to achieve. The European Commission and their regional supervisors are currently researching if the current European Union rules can apply to crypto trading.
The U.S. and Spanish tax agencies have demanded brokers and banks to provide names and trading data of their crypto clients, which could be a negative thing for a customer who wants to remain anonymous in their transactions.
“The benefits of regulation are clear. An appropriate framework would serve to both protect consumers, and ensure the longevity and legitimacy of the industry itself. Given that we are dealing with new and nascent technology, we wouldn’t want to simply cherry pick from existing regulation developed for other asset classes,” said Iqbal Gandham, managing direction for eToro.