In line with the recent legislative policy led by the European Commission, the Czech Republic government aims to create a more strict approach to cryptocurrency anonymity.
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Czech Republic’s Ministry of Finance Enforces Cryptocurrency KYC Procedures
Bitcoin and cryptocurrency are a popular phenomenon in the Czech Republic and the city of Prague. The region has over 80 merchants that accept bitcoin and many popular cryptocurrency startups. Czech Republic officials have traditionally had a pretty lenient stance towards digital currencies. According to regional publication Právní rádce, authorities are now concerned with money laundering and terrorist financing through digital currencies.
On January 1, the Czech Republic initiated its cryptocurrency-related piece of legislation. The policy will require cryptocurrency exchange operators and other associated services to follow Know-Your-Customer (KYC) procedures. Exchanges must ask each customer for their identity card, gender, nationality, and address. “There is no longer any option for customers of bitcoin exchanges to hide behind false names or nicknames,” the new guidelines detail.
The Czech Republic’s Guidelines Follow The European Trend of Protectionism
The Czech Republic’s Ministry of Finance will also require cafes, schools, and various merchants accepting bitcoin to verify the identity of their customers, explains the recent report. Alongside this, the country’s authorities will also soon add a Value Added Tax (VAT) to virtual currencies in the near future.
“Virtual currencies represent an element with which the user can actually disrupt the money trail. It is, therefore, a provision of remuneration in the form of virtual currency that poses the extreme risk of potential abuse for committing tax fraud,” explained the Czech Republic’s Ministry of Finance about its new legislation.
The recent announcement follows the European Commission’s latest roadmap to curb the illicit use of cash and cryptocurrencies. The Commission has also noted an urgency of addressing money laundering and criminal financing involved with these types of payments. The agency believes the biggest problem is anonymity and certain restrictions need to be enforced against these private practices. Furthermore, global regulators have convened at an event held in Doha, Qatar, aimed to “take action against digital currency mixers/tumblers.”
The Prague-Based Cryptoanarchy Institute Cafe Paralelní Polis Targeted
The news also follows the recent fine against the cryptoanarchy institute Paralelní Polis for not adhering to KYC guidelines. Reportedly, the policies force merchants to use an electronic till that sends the merchant’s transactions to a central database. According to reports, Paralelní Polis refused to follow the guidelines and were inspected by the Czech Ministry of Finance. The cryptoanarchy organization believes the Czech Republic’s policies go against the very foundations of the group’s philosophy.
“The State and corporations have data on economic behaviour, and through legislation, they have received complete access to all payment transactions and consumer habits,” a statement from Paralelní Polis explains concerning the fine. “New technology brings the possibility of choice — we are in a time that is defined by the manifesto of cryptoanarchy. With a fast internet connection, reliable anonymity and decentralised currency, you preserve freedom which we have been losing as a society.”
What do you think about the Czech Republic cracking down on businesses not adhering to cryptocurrency KYC policies? Let us know in the comments below.
Images courtesy of Shutterstock, Pixabay, and Paralelní Polis.
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Jamie Redman
