On Thursday 7 June, the special 'TAX 3' committee of the European Parliament on financial crimes, fraud and evasion examined the implications of virtual currencies for financial crime, at a session attended by Prof. Robby Houben of the University of Antwerp.
Houben takes the view that the key problem is the total anonymity provided by transactions carried out in virtual currencies. A drugs trafficker who acquires cash to purchase Bitcoin on an online trading platform and then exchanges the Bitcoin for Ether before selling it to a buyer on a different platform ends up with cash, without any notification to the tax administrations, he explained.
Jeppe Kofod (S&D, Denmark) wanted to know how the EU could actually impose bans on the use of virtual currencies upon certain players or for certain activities.
The problem with bans, Houben explained, is that it would not be possible for all existing virtual currencies. There are several hundred virtual currencies, he stressed. He furthermore considers that any initiative of this kind should avoid hampering innovative 'blockchain' technology, but instead focus on the illegal use of virtual currencies.
A better approach, in his view, would be compulsory licenses to carry out transactions in virtual currencies. This would be a solution both from the point of view of preventing these criminal activities and protecting investors, he said.
“Ultimately, do you think that setting in place a regulatory framework would break the logic of anonymity? Is it technologically possible?”, asked Geoffroy Didier (EPP, France).
Houben considers that the challenge will be a major one, as it is ultimately about dealing with intangible phenomena. Nonetheless, having a toolbox would be progress, albeit not a miracle solution, he said. With regard to this, compulsory registration for users, although intrusive, would be an option to explore, he said. (Original version in French by Marion Fontana)