The EU plans to establish a central database to record virtual currency user information and strengthen virtual currency supervision in conjunction with anti-money laundering laws

The new proposal (full text download) released by the European Commission (EC) at the beginning of this month suggests amending the anti-money laundering law and using it to regulate virtual currency exchanges and wallet service providers. It is reported that the EU is likely to be inspired by this proposal to establish a central database to record virtual currency user information.

The European Commission said that virtual currency transactions are a regulatory loophole in the EU. Therefore, it is necessary to establish a regulated central database.

EU regulators have the power to collect, process and record user information and, in certain circumstances, to share data with governments and private companies.

In order to establish this central database, digital currency companies in the EU must collect private and sensitive information of their customers. The EU proposal stipulates that the central database must be officially established before June 2019.

Regarding cryptocurrency transactions, it is recommended that the EU authorize the establishment and maintenance of a central database to register user identity information, wallet addresses and self-declarations of the use of virtual currencies. The above information must be made public to the Financial Intelligence Unit (FIU).

Main Issues

This EU plan may cause two major problems: infringement of personal privacy and information leakage (the EU's network system is extremely insecure).

The network systems of European governments, law enforcement agencies and various non-profit organizations have been continuously attacked by hackers since 2004, with as many as 229 information leaks, fully demonstrating to the outside world the vulnerability of European government systems.

The European Union and its cybersecurity department have long intervened in darknet and Bitcoin transactions under the guise of upholding justice. They claim that digital currencies are often used for terrorist financing and illegal transactions. Now they want to establish a central database containing personal privacy transaction information.

Perhaps this is mostly the fault of the mainstream media, who have demonized digital currencies. But cash is the best choice for illegal activities and terrorist financing, so cash is completely anonymous, while digital currencies are not.

Digital currency transactions take place on a publicly shared decentralized ledger, and the platform is transparent. Therefore, any network participant can obtain financial transaction data. Earlier, EUROPOL used this feature of the Bitcoin network to successfully crack the Silk Road case.

If the EU is building a central database to centralize virtual currencies to prevent drug trafficking and terrorist financing, then please build the same database for cash users within the EU first. As far as I know, most drug transactions and money laundering activities are done with cash.

Some user opinions

The translator has captured some comments from netizens on Reddit, please feel free to read it for yourself.

Please excuse my rudeness. What a bunch of idiots! No wonder everyone wants Brexit.

If this continues, will we all have to wear the same uniform, have a bright yellow "B" printed on our chests, and have numbers tattooed on our arms?

FlappySocks 5: I think they just want to raise taxes because they are short of money, right? The EU is completely finished. It's better to dissolve it as soon as possible.
Pitchbend: I heard they're breaking up tomorrow, haha.