Regulations targeting illegal use of cryptocurrencies continue to have a negative impact on crypto businesses, as more have stated that they will have to cease operations ahead of the imminent AMLD5 European Union regulation. Following the announcement that mining site Simplecoin was pulling its offering at the end of the year, two more firms, Bottle Pay and Chopcoin, have announced that they are doing the same.
Smaller Companies Left with No Choice
AMLD 5, which imposes tighter reporting obligations for cryptocurrency firms and authorizes financial watchdogs to obtain the addresses and identities of cryptocurrency owners and users, is due to be implemented within the European Union on January 10, 2020. AMLD5 was published in June 2018, giving affected firms 18 months to comply or close down, and with the implementation deadline looming, clearly some companies feel they have no choice but to cease operations.
Bottle Pay announced the “painful decision” to close down the platform around the same time as Simplecoin made their decision public, while Chopcoin, the interactive Bitcoin faucet, revealed yesterday that “regulatory concerns and force [sic] KYC on our users force us to close chop.”
To maintain our integrity as service providers, and to protect the interests of our users, we have taken the painful decision to shut Bottle Pay down rather than become subject to the new #5AMLD regulations.
Please withdraw funds within the next 2 weeks.https://t.co/dZltbf7vjn
— Bottle Pay (@bottlepay) December 13, 2019
UK-based Bottle Pay issued a fuller statement where they lamented the amount of information that they would need to record as part of the new regulations:
The amount and type of extra personal information we would be required to collect from our users would alter the current user experience so radically, and so negatively, that we are not willing to force this onto our community.
This is the same argument made by all companies forced to shutter their services by AMLD5, with the additional burden that 2018’s GDPR regulations also require much tighter controls on user data for EU companies. This double whammy means that EU companies who choose to adapt their businesses to AMLD5 will also have to shoulder the financial burden of securely storing the extra data they are forced to collect, with the very real risk of huge fines should any data be leaked.
If AMLD5 wasn’t enough, crypto companies will also have to bend to the will of another tough set of regulations set out this year by the Financial Action Task Force on Money Laundering (FATF), which exchanges have already started to adapt to. It is therefore not a surprise to see smaller companies forced to close, and indeed, we can expect more closures in the three weeks until the regulations come into effect.