The Bitcoin logo lights up on the European Central Bank building in Frankfurt as Bitcoiners urge bankers to ‘study Bitcoin.’
“The signal goes on, and he shows up. That's the way it's been. That's the way it will be.” Whenever Gotham faces an existential threat, the Bat-Signal lights up the night sky. In the DC Comics universe, Batman always shows up to save the day when he’s called upon.
Bitcoiners in Germany employed a similar tactic this week, emblazoning the preeminent cryptocurrency’s logo with a message to ‘study Bitcoin’ on the side of the European Central Bank building in Frankfurt. The images were shared widely across social media, with notable Bitcoin (BTC) proponents and various company profiles lauding the display.
#Bitcoin looks good on the ECB building pic.twitter.com/k8odYEpAZd
— Alistair Milne (@alistairmilne) March 30, 2023
A dose of the proverbial ‘Orange Pill’ is particularly pertinent given that the global banking sector has been under the spotlight after the collapse of major institutions like Silicon Valley Bank and Signature Bank in the U.S.
Orange pilling #Europe: Study #Bitcoin pic.twitter.com/CBcsh1T5VZ
— Carl ₿ MENGER ⚡️ (@CarlBMenger) March 30, 2023
Meanwhile, European parliamentarians adopted a new draft bill focused on Anti-Money Laundering and Countering the Financing of Terrorism, which sets out potential new rules enforcing KYC requirements for traditional financial and crypto-related services.
In addition, parliamentarians seek to restrict cash and cryptocurrency payments for goods and services where customers cannot be identified. As per the draft legislation, the rules limit cash payments to up to €7,000 for cryptocurrency transactions —or €1,000 if the user’s identity is unknown.
Related: Silicon Valley Bank’s downfall has many causes, but crypto isn’t one
These proposed new rules are separate to the European Parliament’s impending Markets in Crypto-Assets (MiCA) bill which is set to come into effect in 2024, a proposed set of rules and guidelines aimed at regulating the cryptocurrency market in Europe.
Liam Murphy, Managing Director of EMEA at Wachsman, tells Cointelegraph that the AML-CFT bill adopted on March 28 is focused on approving stricter rules to close gaps in combating money laundering, terrorist financing and the evasion of sanctions in the EU.
“It is a separate policy track to MiCA although like with many policy actions, there is some crossover. It should be noted that this was just one more step in the regulatory process and the bill is far from passed yet.”
Murphy added that he was also looking for more clarity on whether cryptocurrency transaction limits only apply to commercial transactions and not to transfers between private individuals.
Given that Wachsman serves a number of cryptocurrency service providers as a communications firm, Murphy noted industry participants are becoming more cognisant that the sector could use regulation to meet its full potential.
“Innovation is unpredictable by its very nature. We are experiencing a digital revolution and there is a real danger of both overregulation and underregulation.”
Erwin Voloder, senior policy fellow at the European Blockchain Association, also spoke to Cointelegraph about the European Parliament’s draft bill’s implications for cryptocurrency payments.
He highlighted that greater clarity over AML/CTF provisions are welcome but contended that a double standard is constantly applied to crypto payments.
Voloder said that MEPs had previously back-peddled on the need to go through a CASP for the KYC process under Article 59a due to being unnecessarily onerous, according to industry feedback:
“The caps on crypto transactions make the case that crypto transactions are 7x as risky as cash transactions from an AML/CTF perspective, which in comparison to the available data on global money laundering does not line up.”
What also remains difficult to gauge is how cryptocurrency services like Decentralized Finance (DeFi) protocols and even decentralized autonomous organizations will be governed by potential new laws.
“MiCA left ‘fully decentralized finance’ out of scope because it’s often difficult to determine a chain of liability.”
Voloder used an example considering that a DeFi platform may have an interface that is ‘client facing’ but the actual economic activity takes place within the smart contract, which ‘is abstracted and independent from the interface layer’.
This suggests that there is a strategy forming at the margins of the industry that could bring liability and default reporting obligations to the DeFi space, including NFTs.
The AML focused legislation brings crypto under its purview to tighten up commercial transactions across Europe. Meanwhile the cryptocurrency space is shining a broad spotlight on the recent failings of the traditional banking sector. What remains to be answered is which industry needs more oversight at this moment in time.
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