Germany Tries to Track Bitcoin Transactions to Stop Terrorism Financing

     Germany wants to bring electronic money under government control. On January 2, the Christian Social Union (CSU) submitted a document proposing several anti-terrorism plans. According to Die Welt, one of the plans includes bringing payments in virtual currencies such as Bitcoin under control. The purpose of this measure is to prevent

Terrorist financing activities have become more acute since the Munich terrorist attack alert in Germany on New Year's Day.

With Bitcoin, customers can be anonymous when trading, without providing personal identification information, and it is difficult for outsiders to trace the sender and the recipient. These features provide great convenience for transactions for illegal purposes, such as funding terrorist activities. According to the German newspaper Die Welt :

"The Islamic State's funding sources are mainly through the sale of oil, the antique trade, and possibly global funding."

   This is the main reason why the German government wanted to control digital currency transactions from the beginning - they wanted to drain the terrorists' income source, even though Germany needed funds to implement this strategy. Although this is contrary to the anonymity principle of Bitcoin, this strategy seems reasonable. On the other hand, this may be a reasonable cost to weaken terrorism.

Could the German government create a regulated digital currency?

     Ethereum founder Vitalik Buterin believes that it is very likely that the government will regulate digital currencies, but in order to achieve this goal, the government must create a new type of digital currency. He told reporters:

     “You can definitely create a digital currency and put all sorts of controls on it that governments might want; the future system might be like this, for example, if you want to open an account, you have to get a cryptographically signed certificate from the government.”

Ethereum founder Vitalik Buterin

However, users of existing digital currencies should not be too worried if governments require them to no longer be completely anonymous. Governments can create their own currencies, but they cannot impose changes on existing currencies. Buterin added:

“The government cannot force existing digital currencies to make the above changes unless it can convince all the digital currency miners and development communities to accept these changes.”