AMLD5: European directive begins to impact crypto-startups

With the gradual establishment of the 5th European anti-money laundering directive, more and more startups specialized in cryptocurrency close their doors or move abroad.

The 5th European directive against money laundering (AMLD 5) entered into force in the summer of 2018. The countries of the European Union had until Friday to transpose the new rules into their national law.

It brings important changes for banks and financial services companies, including cryptographic service providers like crypto-scholarships and the crypto wallet providers.

The latter must in particular carry out verifications KYC (Know Your Customer) breakouts. Cumbersome and costly procedures which risk penalizing small market players.

Several crypto-startups, such as the micro-payments specialist BottlePay, have already announced the closure of their services, citing the implementation of the directive AMLD5.

“The amount and type of additional personal information we would be required to collect from our users would change the user experience so drastically and negatively that we are not willing to impose this on our community,” explained Bottle Pay last week.

Others, like Deribit, have taken the decision to move their business to another jurisdiction. Yesterday, the crypto-derivatives platform said that its platform would no longer be operated by its parent company in the Netherlands but by its new Panamanian subsidiary Deribit BV.

“The platform is moving to Panama because we want to continue to offer an easily accessible trading platform at low prices. The Netherlands will most likely adopt a very strict implementation of the new EU directive which also applies to crypto companies, ”said a statement released by the Dutch start-up.

In France, crypto companies will also be affected by the consequences of decree n ° 2019-1213 of 21 November 2019 relating to service providers on digital assets (PSAN), which derives from the 5th European directive.

In a recent interview with Cryptonaute, Nicolas Louvet, the CEO of the French crypto-broker Coinhouse, returned to the subject and stated that "the weight of the regulation, in particular the constraints imposed by the FATF, would oblige crypto-scholarships to apply KYC and AML procedures so costly (more than 200 € / year per customer) that private customers would no longer be accepted ”.

“Only professional players: traders or institutions, at the“ perfect ”KYC will be clients of exchanges. Coinhouse is already one of them. Actors like Coinhouse will liaise with end customers, ”He said.

We can therefore expect to see other European exchange platforms and crypto-startups disappear or settle in more lenient jurisdictions during the year 2020.