France introduces KYC compulsion for Bitcoin Broker
Justitia holds in her hand the scales of justice, from which two Bitcoin coins are suspended. The French flag is in the background.
In a press release issued by the French Ministry of Finance, the government has revealed stricter KYC rules for crypto-transactions.
On 9 December, French Finance Minister Bruno Le Maire let the crypto-cat out of the Bitcoin Code bag and unveiled a legislative update setting stricter know-your-customer rules for all crypto-companies operating in the country, including for peer-to-peer transactions. The revised law could put an end to the anonymity of the French crypto space.
From now on, crypto providers will be forced to validate the identities of their users. Anonymous accounts will be prohibited. Cooperation with national secret services and the freezing of assets will also be made compulsory. As justification, France mentions, in addition to general security and attractiveness aspects, the fight against money laundering and terrorist financing. In its press release, the Ministry refers to a recent dismantling of a terrorist network in September that allegedly used transactions of digital assets. Crypto vendors have until mid 2021 to make the necessary adjustments.
France a prosperous block chain location
The recently published report of the EU Blockchain Observatory provides a detailed overview of France’s blockchain economy. The country has a significant number of block chain start-ups. They are helped by state subsidies, such as aid funds. A state fund has already invested almost €300 million in infrastructure projects of young companies in the crypto-sector. In addition, there are de-bureaucratising measures, such as the PACTE law, which removes obstacles to the establishment of start-ups. France is thus trying to establish the country as a leading crypto-space hub.
G7 favours crypto regulation
France is therefore now putting in place comprehensive regulations for crypto-space from next year. This follows the recommendations of the Finacial Action Task Force (FATF) and the G7. The finance ministers of the seven most important industrialised nations of the West were already unanimously in favour of regulation on Tuesday. For example, a press release by the US Treasury Department indicated that they wanted to impose regulations on the developing crypto landscape to prevent its use for “malicious purposes and illegal activities”.
5th EU money laundering directive as a basis in Germany
With the legislative adjustment in France, the government is also following the 5th update of the European Union’s money laundering directives, which came into force in January 2020. This directive has also been in force in Germany since the beginning of the year. In the Federal Republic of Germany, crypto providers have since been added to the group of obligated parties under the Money Laundering Act. According to this law, credit institutions, insurance companies and now also providers of crypto-currencies are obliged to keep customers in a transparency register, where proof of identity must be deposited. This means that the anonymity feature characteristic of crypto-currencies is largely omitted here as well, which is now also disappearing in France.