The European Commission (EC) has put forward a proposal that would strip away the ability to trade Bitcoin anonymously due to supposed links to terrorism.

In an Action Plan to strengthen the fight against the financing of terrorism (PDF), the EC argues that criminals are quick to seek out new ways of moving money that offer a lower risk of detection, and that Bitcoin was a primary way of doing so, despite providing zero evidence to back the point up.

Under the proposed rules, which are yet to be officially adopted, platforms offering Bitcoin or other cryptocurrency transfers in the European Union would be brought under the scope of the Anti-Money Laundering Directive, which would force Bitcoin service providers to request identifying details from customers before allowing them to process payments.

In effect this would end the anonymity of Bitcoin payments, presuming that is they could enforce the rules.

The proposal doesn’t target Bitcoin alone, and also targets anonymous prepaid credit cards; under the proposed rules, vendors offering pre-paid cards would be required to record the identities of those who purchase the cards.

“With today’s Action Plan we are moving swiftly to clamp down on terrorist financing, starting with legislative proposals in the coming months,” European Commission Vice President Frans Timmermans said in a press release. “We must cut off terrorists’ access to funds, enable authorities to better track financial flows to prevent devastating attacks such as those in Paris last year, and ensure that money laundering and terrorist financing is sanctioned in all Member States.”

“We want to improve the oversight of the many financial means used by terrorists, from cash and cultural artefacts to virtual currencies and anonymous pre-paid cards, while avoiding unnecessary obstacles to the functioning of payments and financial markets for ordinary, law-abiding citizens.”

Terrorists win again

Despite a report from the Ghost Security Group that bitcoins were used to fund the Paris Islamic terrorist attacks, there has never been actual solid proof that this is the case. But that has never stopped nanny states like the European Union from using unproven links as an excuse to further restrict the freedom of its citizens.

When the possibility of this crackdown first became news last November, I wrote this at the time, and nothing has changed since:

It may be cliched to say cracking down on anything as a result of terrorism is a case of letting the terrorist win, but without question the proposal by the European Union precisely fits this definition ….

A crackdown or even a potential ban on Bitcoin in Europe doesn’t so much channel Orwell but Martin Niemöller in how freedoms and even people are slowly taken away without many saying a thing until the hand of Government comes for them.

First they came for Bitcoin, and I did not speak out—
Because I do not use Bitcoin.

Given it’s still only a paper and has not been officially adopted yet by the European Union, we can only hope that it never does.

Image credit: blackcustard/Flickr/CC by 2.0