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EU Plans To Create Database of Bitcoin Users With Identities and Wallet Addresses (softpedia.com) 130

Posted by BeauHD from the known-transactions dept.
An anonymous reader writes from a report via Softpedia: "The European Commission is proposing the creation of a database that will hold information on users of virtual currencies," reports Softpedia. "The database will record data on the user's real world identity, along with all associated wallet addresses." The database will be made available to financial investigation agencies in order to track down users behind suspicious operations. The creation of this database is part of a regulatory push that the EU got rolling after the Paris November 2015 terror attacks, and which it officially put forward in February 2016, and later approved at the start of July 2016. Legally, this is an attempt to reform the Anti-Money Laundering Directive (AMLD). The current draft is available here. The current AMLD draft reads: "The report shall be accompanied, if necessary, by appropriate proposals, including, where appropriate, with respect to virtual currencies, empowerments to set-up and maintain a central database registering users' identities and wallet addresses accessible to FIUs, as well as self-declaration forms for the use of virtual currency users."
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EU Plans To Create Database of Bitcoin Users With Identities and Wallet Addresses More

EU Plans To Create Database of Bitcoin Users With Identities and Wallet Addresses

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  • Really? (Score:5, Insightful)

    by Anon-Admin ( 443764 ) on Tuesday July 26, 2016 @08:33PM (#52586677) Journal

    The suggested process for using bitcoin is to create a new wallet address for each transaction.

    They will never be able to keep up with it.

    I guess this is what happens when a bunch of people who dont understand the technology try to regulate it.

    • Re:Really? (Score:5, Interesting)

      by Entrope ( 68843 ) on Tuesday July 26, 2016 @08:46PM (#52586735) Homepage

      You overlooked the "self-declaration" forms for people using virtual currencies. That translates to making it illegal to use Bitcoin (etc.) without telling the government about your wallet(s) -- probably upon pain of hefty fines. You might not get caught if you only keep funds in Bitcoin form, but if you ever try to redeem it for goods or services in Europe, be prepared to fess up.

      • Re: (Score:3)

        by Dunbal ( 464142 ) *
        What exactly is stopping you from sitting on a pile of bitcoins, and creating a new, declared wallet specifically for any particular "withdrawal"... This is about as stupid as politicians get, but then again...

        • Re: (Score:3, Insightful)

          by Anonymous Coward
          because it leaves a trail. once they have one point they can then connect you to everything that flows in or out or any other wallet you have transactions with. It is the inherent problem with bitcoin, it is all well and good till you actually need to use it for something in the real world.

          • Re: (Score:3, Interesting)

            by Dunbal ( 464142 ) *
            But you're assuming - or THEY are assuming - that every place that bitcoin came from is from a wallet in a country subject to their silly law. What can they do if the trail is from a wallet that was created in Panama, for example? Prove that Panama to me is an illegitimate transaction AND that I actually own the wallet in Panama. Trivial to set up with VPN's and/or friends/relatives who are actually outside your country. Again, politicians fail to realize that their laws are limited by geography whereas the
            • from panama, well you just did an international transaction and are therefore subject to money laundering laws around international transfers which require declaration of the parties involved in the transfer and the reason for the transfer..

              • Re: (Score:2)

                by Dunbal ( 464142 ) *
                Prove that the wallet is in Panama. This gets real complicated, real fast. I bought some bitcoins online, I didn't like it, and I sold them. Prove me wrong.

                • Re: (Score:2)

                  by Entrope ( 68843 )

                  Bought bitcoins? Sold them? In exchange for what? Drugs? Guns or bombs? Pirated movies? This isn't looking very good for Bob the Bitcoin Launderer.

                  The police found out that wallet X is Bob's (because he exchanged bitcoins for something useful), and that Bob was illegally hiding ownership of that wallet. Bob is probably going to end up with the burden of proving that each transaction from wallet X was with a third party, rather than Bob trying to launder bitcoins to other wallets he controls -- after

                • It isn't up to them to prove, it is up to you to prove it was legitimate! money laundering laws were created to prevent the scenarios you describe by putting requirements on you and any exchanges and 3rd parties involved to correctly record the transactions and identities and report them where appropriate.
            • Geography is seen as a mere inconvenience when applying laws. Hosting it in Panama is a very insignificant speed bump compared with Switzerland, especially that since to the USA Panama is very much what the Romans called a "client state".

            • Re: (Score:2)

              by Flammon ( 4726 )
              Vendors will be forced to only accept payments from a whitelist of BTC addresses and you'll need to identify yourself to be on that list.

        • Re: Really? (Score:1)

          by Anonymous Coward

          If there investigation is about tax avoidance you are assumed guilty until you prove otherwise.

        • Re:Really? (Score:4, Insightful)

          by Opportunist ( 166417 ) on Wednesday July 27, 2016 @04:01AM (#52588065)

          Shhh... Governments are like parents. As a kid, you keep your parents thinking that you believe in Santa so they continue to give you gifts at Christmas. With governments, you keep them thinking that their laws work so they keep out of your hair.

      • Re: (Score:2)

        by mysidia ( 191772 )

        So declare your wallets as required, but fund each transaction when you go to make a spend by generating a batch of unique Wallet IDs, and then spend the funds to the new Wallet IDs through one of the "Privacy mixing services"

        Conclude a sequence of transactions resulting in the new wallet IDs having zero remaining, then after you confirmed the Balance is 0, and the Bitcoin network has 1000 confirmations, destroy your record of the now empty temporary wallet IDs.....

        Next time you go to declar

        • Why do you think the law won't require you to declare each wallet when you first create, fund, or acquire it?

          • Re: (Score:2)

            by mysidia ( 191772 )

            Why do you think the law won't require you to declare each wallet when you first create, fund, or acquire it?

            Because governments are generally inefficient and require information reported to them through paper forms on a quarterly or annual basis.

            Also, you don't ever necessarily actually create, fund, or acquire the Temporary wallet ID that generates the final spend.

            Essentially.... you are concerned about the whole public knowing all your transactions, since Bitcoin transactions are public knowled

            • So you're going to evade the anti-money-laundering laws by having a third party in some other country launder money for you.

              Do you know how *else* I know you didn't read the relevant parts of these EU Directives?

      • Re:Really? (Score:5, Informative)

        by AmiMoJo ( 196126 ) on Wednesday July 27, 2016 @05:11AM (#52588185) Homepage Journal

        Nope.

        From the proposal:

        In respect of designing providers of exchange services between virtual currencies and fiat currencies as obliged entities, the proposed amendments respect the proportionality principle. In order to allow competent authorities to monitor suspicious transactions with virtual currencies, while preserving the innovative advances offered by such currencies, it is appropriate to define as obliged entities under the 4AMLD all gatekeepers that control access to virtual currencies, in particular exchange platforms and wallet providers.

        In other words, it will be perfectly legal to use Bitcoin as you please and they don't propose making people register their private wallets etc, just the same as they would never propose people register their physical wallets. They are only interested in having exchanges and wallet providers (virtual banks) collect this information, just like exchanges and banks for fiat currency have to.

        The idea is to make money laundering harder. It's a sensible, practical proposal that is merely the existing laws applying to fiat currencies being applied to virtual ones. It would be stupid if they didn't.

        I know it's unfashionable to read the article, but this is what gives the EU a bad name and leads to stupidity like Brexit. It look me about 30 seconds to see what this was really about. Doesn't help that TFA and the summary are both stupid I suppose.

        • "Nope" to you. Including those entities as "obligated entities" has the effect I described. 4AMLD requires that obligated entities not keep anonymous accounts, and if any anonymous account exists (from before the time it came into effect, or covered the account in question), that they do Customer Due Diligence before the account can be used.

          Next time, do more than 30 seconds of research before spouting off your mouth. Governments make these regulations a nearly impenetrable maze on purpose.

        • "Making money laundering harder" isn't really sensible. All implementations are hubris and rather inconvenient for model-citizens.

          In the United States, carrying a certain sum of cash is indication of criminal activity. This is done to combat money laundering and drug trade. They might not be able to charge you with a crime, but they can seize your cash; it's called asset forfeiture. In Alabama, if the police pull you over for a broken tail light, they can demand you display your wallet contents (nota

      • Re: (Score:2)

        by Bengie ( 1121981 )
        Even better. Combine "New wallet with each transaction" and "Report every wallet" and you have a recipe to DDOS the service.

    • It seems the key field is real-world ID.

      You're going to create a new one of those for each transaction also, right? And if they can discern the real-world ID once, they can do it again, so IP address, any of various 'fingerprints', etc will need to be randomized or incremented.

      Iterate, and you're safe, until you find our you're not.

  • ...to find out who satoshi nakamoto is.
  • Good luck accomplishing that!
    • Why? seems a relatively easy thing to do, sure there will be some they can't get data for but they have access to bitcoin exchange data, any conversion to real money or purchase of goods etc leaves an easy to follow record of activity. Sure you could have many wallets and never convert anything or buy anything real but then they probably aren't the main target of this, seems aimed at money laundering which will definitely be something they can follow the bouncing ball for.

    • Re: (Score:2)

      by AHuxley ( 892839 )
      They create a list of the last people who sold a set of numbers for a small fee to "someone" a year ago for cash?
      Every EU transaction at some level is now with a registered informant?
      Don't risk a spend or buy transaction in the EU? A digital currency seems more vital than ever :)

    • Re: (Score:2)

      by dbIII ( 701233 )
      Blockchain
  • And they're going to enforce the "opt in" part of this deal how, again? The whole POINT of virtual currencies is to keep them out of control of the government(s).

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      And they're going to enforce the "opt in" part of this deal how,

        "Jail" the way governments control things.

  • It is going to be hard to connect buyers and sellers with all the coin mixing services available. Especially with popular alt coins like dash coin (http://dash.org ) that have mixing built into the protocol.

  • Marvelous.

    Now write a legal definition of "virtual currency" that includes Bitcoin but excludes WoW gold and EVE Online ISK. I dare you.

    Actually, they might be perfectly happy to suck those in too, just because a bureaucrat never met a tracking database they didn't like.

  • no evidence (Score:3)

    by ooloorie ( 4394035 ) on Tuesday July 26, 2016 @10:08PM (#52587157)

    There is no evidence that Bitcoin was used by terrorists. This is the usual statist bullshit coming from European governments.

  • Last I checked there were no conclusive links Paris attacks were funded by bitcoins (one source here http://www.coindesk.com/bitcoi... [coindesk.com] ). I'm pretty sure it was proven though that the terrorist were breathing French oxygen in the atmosphere though, so maybe we should get the French to start tightly regulating who can breathe over there and who can plant plants that generate that oxygen (you know, since it may be used by a terrorist)?

    • EU used unconfirmed rumors in the beginning. It was cleared later that ISIS terrorists didn't use Bitcoin, but by that point the ball got rolling and nobody else cared.

  • €168 billion in VAT fraud a year because they can't exchange tax data if their life depended on it, and now they want to run a shadow bank to track my digital collectors items?

    • Sales and use taxes, such as VAT, are one of the most-effective ways to eliminate jobs. Any state that has a sales tax or a VAT is already loony.

  • I hope there's a list of serial numbers for cash, so we know how many brown envelopes the crooked politicians have accepted in bribes to pass EU laws.

  • I think the only thing that EU is still missing is proper uniforms for its guardians (black with nice double lightning would be perfect on the collar). I find the said salute a bit silly but if they want to go all he way then so be it. Schulz and Juncker are also much less photogenic than the little Austrian back in the day was however and this is not fixable I think.

  • Freedom is a threat to 'them'.

    Liberty is optional, regulated, and therefor nonexistent.

    If you are not in the EU, take this as a lesson and consider how your situation could become that of someone in the EU. Then act accordingly.

  • Govt can always track them when they cash out their bitcoins

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